Profit and loss (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Interest income	87,398	94,796	101,775	111,752	123,732
Interest expense	-12,269	-12,532	-12,135	-13,352	-14,687
Net interest income	75,129	82,264	89,640	98,400	109,045
Net fees and commissions	16,653	17,980	19,847	21,545	23,699
Trading related profits	1,888	2,855	3,105	3,250	3,500
Other operating revenue	6,276	5,208	5,458	5,500	5,750
Non-interest income	24,817	26,042	28,410	30,295	32,949
Operating income	99,945	108,307	118,050	128,694	141,994
Depreciation	-3,126	-2,017	-2,104	-2,212	-2,319
Amortisation	0	0	0	0	0
Operating expenses	-18,178	-18,593	-19,019	-19,512	-20,019
Employee share expense	-16,198	-17,444	-18,316	-19,232	-20,194
Pre-provision op profit	62,443	70,252	78,610	87,739	99,462
Provisions for bad debt	-2,263	-2,034	-3,747	-4,576	-5,593
Other provision charges	0	0	0	0	0
Operating profit	60,180	68,218	74,863	83,162	93,869
Other non-op income	0	0	0	0	0
Associates & JCEs	0	0	0	0	0
Pre-tax profit	60,180	68,218	74,863	83,162	93,869
Income tax	-11,522	-13,367	-14,973	-16,632	-18,774
Net profit after tax	48,658	54,851	59,890	66,530	75,095
Minority interests	-19	-15	-17	-20	-23
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	48,639	54,836	59,873	66,510	75,072
Extraordinary items	0	0	0	0	0
Reported NPAT	48,639	54,836	59,873	66,510	75,072
Dividends	-26,196	-34,209	-32,902	-35,924	-39,906
Transfer to reserves	22,443	20,627	26,971	30,586	35,166
Growth (%)
Net interest income	17.4	9.5	9.0	9.8	10.8
Non-interest income	5.7	4.9	9.1	6.6	8.8
Non-interest expenses	10.5	2.3	2.3	2.6	2.6
Pre-provision earnings	13.5	12.5	11.9	11.6	13.4
Net profit	19.4	12.7	9.2	11.1	12.9
Normalised EPS	19.4	12.7	9.2	11.1	12.9
Normalised FDEPS	19.4	12.7	9.2	11.1	12.9
Loan growth	14.7	13.7	7.1	10.2	10.1
Interest earning assets	6.2	3.1	8.7	14.5	10.6
Interest bearing liabilities	6.1	4.2	10.1	10.0	10.0
Asset growth	7.1	2.9	8.3	13.9	10.3
Deposit growth	5.9	4.8	10.0	10.0	10.0
Source: Company data, Verdhana estimates

Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash and equivalents	21,702	29,316	34,031	37,395	41,138
Inter-bank lending	0	0	0	0	0
Deposits with central bank	92,618	36,408	42,264	46,441	51,090
Total securities	420,208	395,576	439,330	539,520	601,715
Other int earning assets	10,816	19,812	21,292	31,515	35,567
Gross loans	801,049	905,337	968,495	1,065,345	1,171,879
Less provisions	-33,309	-32,625	-34,026	-35,603	-38,196
Net loans	767,740	872,713	934,469	1,029,742	1,133,684
Long-term investments	0	0	0	0	0
Fixed assets	26,825	28,251	28,146	27,935	27,616
Goodwill	0	0	0	0	0
Other intangible assets	0	0	0	0	0
Other non IEAs	68,198	67,226	70,000	75,000	80,000
Total assets	1,408,107	1,449,301	1,569,532	1,787,547	1,970,810
Customer deposits	1,093,969	1,146,170	1,260,787	1,386,866	1,525,552
Bank deposits, CDs, debentures	11,126	4,987	5,486	6,035	6,638
Other int bearing liabilities	2,130	2,743	3,652	3,967	4,314
Total int bearing liabilities	1,107,224	1,153,900	1,269,925	1,396,867	1,536,504
Non-int bearing liabilities	58,345	32,567	9,784	63,167	69,484
Total liabilities	1,165,569	1,186,466	1,279,708	1,460,034	1,605,988
Minority interest	181	194	212	231	254
Common stock	7,090	7,090	7,090	7,090	7,090
Preferred stock	0	0	0	0	0
Retained earnings	222,957	243,679	270,651	301,237	336,403
Reserves for credit losses	0	0	0	0	0
Proposed dividends	0	0	0	0	0
Other equity	12,309	11,871	11,871	18,955	21,075
Shareholders' equity	242,356	262,641	289,612	327,282	364,568
Total liabilities and equity	1,408,107	1,449,301	1,569,532	1,787,548	1,970,810
Non-perf assets	14,198	15,528	16,686	18,355
Balance sheet ratios (%)
Loans to deposits	73.2	79.0	76.8	76.8	76.8
Equity to assets	17.2	18.1	18.5	18.3	18.5
Asset quality & capital
NPAs/gross loans (%)	1.8	1.7	1.7	1.7	0.0
Bad debt charge/gross loans (%)	0.28	0.22	0.39	0.43	0.48
Loss reserves/assets (%)	2.37	2.25	2.17	1.99	1.94
Loss reserves/NPAs (%)	234.6	210.1	203.9	194.0	–
Tier 1 capital ratio (%)	29.4	28.9	31.1	30.0	30.2
Total capital ratio (%)	29.4	28.9	31.1	30.0	30.2
Per share
Reported EPS (IDR)	394.56	444.83	485.69	539.53	608.98
Norm EPS (IDR)	394.56	444.83	485.69	539.53	608.98
FD norm EPS (IDR)	394.56	444.83	485.69	539.53	608.98
DPS (IDR)	212.50	277.50	266.90	291.41	323.72
PPOP PS (IDR)	506.53	569.88	637.68	711.73	806.83
BVPS (IDR)	1,965.98	2,130.52	2,349.31	2,654.89	2,957.36
ABVPS (IDR)	1,965.98	2,130.52	2,349.31	2,654.89	2,957.36
NTAPS (IDR)	1,965.98	2,130.52	2,349.31	2,654.89	2,957.36
Valuations and ratios
Reported P/E (x)	23.7	21.0	19.3	17.3	15.4
Normalised P/E (x)	23.7	21.0	19.3	17.3	15.4
FD normalised P/E (x)	23.7	21.0	19.3	17.3	15.4
Dividend yield (%)	2.3	3.0	2.9	3.1	3.5
Price/book (x)	4.8	4.4	4.0	3.5	3.2
Price/adjusted book (x)	4.8	4.4	4.0	3.5	3.2
Net interest margin (%)	5.89	6.17	6.35	6.24	6.15
Yield on assets (%)	6.86	7.11	7.20	7.08	6.98
Cost of int bearing liab (%)	1.14	1.11	1.00	1.00	1.00
Net interest spread (%)	5.72	6.00	6.20	6.08	5.97
Non-interest income (%)	24.8	24.0	24.1	23.5	23.2
Cost to income (%)	37.5	35.1	33.4	31.8	30.0
Effective tax rate (%)	19.1	19.6	20.0	20.0	20.0
Dividend payout (%)	53.9	62.4	55.0	54.0	53.2
ROE (%)	21.0	21.7	21.7	21.6	21.7
ROA (%)	3.57	3.84	3.97	3.96	3.99
Operating ROE (%)	26.0	27.0	27.1	27.0	27.1
Operating ROA (%)	4.42	4.77	4.96	4.95	5.00
Source: Company data, Verdhana estimates

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Company profilePT Bank Central Asia Tbk, commonly known as Bank Central Asia (BCA), is an Indonesian bank founded on 21 February 1957. It is considered as the largest privately owned bank in Indonesia.

Valuation MethodologyWe derive our TP of IDR12,600 using DuPont methodology, with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.8x, and a CAR-adjusted ROAE of 24.5%. Our TP implies 5.4x FY25F P/B and 26.9x FY25F P/E. The benchmark for this stock is the JCI.

Risks that may impede the achievement of the target priceRisks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

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ESGBCA's commitment to sustainability is manifested through integrated corporate governance practices in various functions, and also directly involving the Board of Directors. Corporate social responsibility is the shared responsibility of the Board, while the Director of Finance and Planning is responsible for coordinating and overseeing the implementation of the sustainable finance principles. In 2019, BCA established the Environment, Sustainability, and Governance (ESG) Sub-Division that is positioned under the supervision of the Corporate Secretary and Communications Division, which reports to the Director of Finance and Planning. The ESG Unit is responsible for the corporate secretarial duties, the application of good corporate governance (GCG), and the implementation of Sustainable Finance. In practice, the ESG Unit works closely with other units to embed sustainability in a strategic and integrated manner at BCA. BCA is concerned about climate change risks and opportunities and supports the attainment of the Sustainable Development Goals (SDGs). One of the ways to mitigate climate change risks is through the implementation of risk management and three lines of defense. On the other hand, BCA sees climate change opportunities that will result in the changes in types of financing that support climate change mitigation. BCA supports financing for debtors who are concerned about social aspects, including the sustainability of Indonesian culture, as well as the environmental aspects, including preventing water crisis. By considering the environmental, social and governance (ESG) risks involved in each financing, BCA encourages debtors not to cause loss of biodiversity, deforestation, drought, pollution, violations of human rights and workers' rights. Indirectly, the policies in BCA also strive to prevent deforestation (no deforestation). BCA is committed to implementing the principles of good corporate governance (GCG) as a basis for conducting fair and clean business practices and also avoiding fraud. Some aspects that are covered in the context of fair business practices are related to anti corruption, fair business competition, the efforts to encourage the value chain to engage in social and environmental responsibility, and also the intellectual property rights (IPR). BCA continuously develops corporate social responsibility programs. The developments are not only to contribute to the enhancement of communities’ welfare but also to improve the environmental quality and other activities supporting the Sustainable Development Goals (SDGs). The programs, managed under the Bakti BCA, are implemented through three pillars, namely: Smart Solutions for education and financial literacy education, Smart Solution for culture, health, and natural environment areas, Excellent Business Solution for MSME development and community empowerment through fostered village initiatives

Fig. 1: BBCA FY24 Summary

Fig. 2: BBCA earnings changes & add new forecast year

Fig. 3: BBCA loan assumptions & classifications

Fig. 4: BBCA valuation

BCA - Fair Valuation	New	OLD	Remarks
Risk free rate %	6.50	6.50
Equity risk premium %	7.80	7.80
Beta (x)	0.80	0.80
Cost of capital %	12.70	12.70
Growth rate (2-yr Cagr) %	10.00	10.00
CAR-adj ROAE %	24.50	24.50
12m fwd BVPS (IDR)	2,349	2,468	FY25F book as reference from FY24F
Target PB  x	5.4	5.4
Implied PER x	26.0	26.5
Implied share price (IDR)	12,613	13,249	Rounded to IDR12,600 (from IDR13,200)