Bank Central Asia (BBCA IJ) (Buy) - Slower growth pace

Slower growth pace

TP cut to IDR10,100 (from IDR12,300)

The Indonesia banking sector remains challenging going into 2026, which may continue to affect operations of major banks, specifically in the corporate customers segment. Among major banks, we think BBCA will continue to be one of the few capable of navigating the changing landscape. This could potentially translate into a slower earnings growth trajectory for the bank in the medium term. In this note, we have adopted more conservative earnings estimates for the FY25-27F period, lowering our projections by ~1-5%, implying a three-year(FY24-27F) earnings CAGR of ~4%. Still, despite this, we forecast BBCA to deliver ROAA of ~3.3-3.7% over the same period, still above the historical 20-year average ROAA of ~3.0%. Headline ROAE may dip below 20% (in 2027F), but this primarily reflects the bank’s high capital base (i.e., low leverage ratio). This would mean elevated dividend payout ratios in the coming years, which would translate into ~4% yield. On the back of the above, we retain our long term Buy rating on BBCA with revised TP of IDR10,100 (from IDR12,300).

Earnings cut by ~1-5% over FY25-27F period

Going into 2026, we expect several factors will affect BBCA’s earnings:

Loan growth remaining in the high single digits at ~7-8% p.a. – compared to a 20-yr average of ~15% p.a. This suggests tight lending competition, reducing any lending pricing powers.
Consequently, this would mean a gradual margin decline. Primarily, this reflects soft loan demand and continued competition, in our view, resulting in lower blended lending rates (and hence asset yields). Ultimately, this would lower consolidated NIMs by 20bp relative to prior projections for the FY26-27F period.
Elevated cost of capital (CoC) given the continued challenging environment. We have assumed a gradual uptrend in CoC from ~50bp in 2025F, to ~60bp in 2026F and to ~75bp in 2027F.

Valuation and risks

We derive our TP of IDR10,100 (from IDR12,300) using DuPont analysis, with key parameters as follows: a risk-free rate of 6.5% (unchanged), an equity risk premium of 7.8% (unchanged), beta of 0.9x (from 0.8x reflecting more challenging environment) and a CAR-adjusted ROAE of 24.5% (unchanged). Our TP implies 4.1x FY26F P/B (vs current price valuation of 3.4x) and 21.3x FY26F P/E (vs current price valuation of 17.5x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
PPOP (bn)	70,252	75,604	75,082	81,984	79,056	89,307	85,107
Reported net profit (bn)	54,836	56,719	56,301	60,733	58,391	64,896	61,536
Normalised net profit (bn)	54,836	56,719	56,301	60,733	58,391	64,896	61,536
FD normalised EPS	444.83	460.10	456.71	492.66	473.66	526.43	499.18
FD norm. EPS growth (%)	12.7	3.4	2.7	7.1	3.7	6.9	5.4
FD normalised P/E (x)	18.7	–	18.2	–	17.5	–	16.6
Price/adj. book (x)	3.9	–	3.6	–	3.4	–	3.2
Price/book (x)	3.9	–	3.6	–	3.4	–	3.2
Dividend yield (%)	3.3	–	3.6	–	3.7	–	3.8
ROE (%)	21.7	20.8	20.7	20.7	20.0	20.5	19.6
ROA (%)	3.8	3.8	3.7	3.6	3.5	3.5	3.3

Source: Company data, Verdhana estimates

Key data on Bank Central Asia

Profit and loss (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Interest income	87,398	94,796	100,378	107,090	116,012
Interest expense	-12,269	-12,532	-12,135	-13,352	-14,687
Net interest income	75,129	82,264	88,243	93,738	101,325
Net fees and commissions	16,653	17,980	18,736	19,137	19,581
Trading related profits	1,888	2,855	2,750	2,750	2,750
Other operating revenue	6,276	5,208	5,000	5,000	5,000
Non-interest income	24,817	26,042	26,486	26,887	27,331
Operating income	99,945	108,307	114,729	120,626	128,656
Depreciation	-3,126	-2,017	-2,104	-2,212	-2,319
Amortisation	0	0	0	0	0
Operating expenses	-18,178	-18,593	-19,227	-20,125	-21,035
Employee share expense	-16,198	-17,444	-18,316	-19,232	-20,194
Pre-provision op profit	62,443	70,252	75,082	79,056	85,107
Provisions for bad debt	-2,263	-2,034	-4,684	-6,043	-8,159
Other provision charges	0	0	0	0	0
Operating profit	60,180	68,218	70,398	73,013	76,949
Other non-op income	0	0	0	0	0
Associates & JCEs	0	0	0	0	0
Pre-tax profit	60,180	68,218	70,398	73,013	76,949
Income tax	-11,522	-13,367	-14,080	-14,603	-15,390
Net profit after tax	48,658	54,851	56,318	58,410	61,559
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	56,301	58,391	61,536
Extraordinary items	0	0	0	0	0
Reported NPAT	48,639	54,836	56,301	58,391	61,536
Dividends	-26,196	-34,209	-36,971	-37,958	-39,367
Transfer to reserves	22,443	20,627	19,330	20,433	22,169
Growth (%)
Net interest income	17.4	9.5	7.3	6.2	8.1
Non-interest income	5.7	4.9	1.7	1.5	1.6
Non-interest expenses	10.5	2.3	3.4	4.7	4.5
Pre-provision earnings	13.5	12.5	6.9	5.3	7.7
Net profit	19.4	12.7	2.7	3.7	5.4
Normalised EPS	19.4	12.7	2.7	3.7	5.4
Normalised FDEPS	19.4	12.7	2.7	3.7	5.4
Loan growth	14.7	13.7	7.0	8.0	7.8
Interest earning assets	6.2	3.1	8.6	13.1	9.2
Interest bearing liabilities	6.1	4.2	10.1	10.0	10.0
Asset growth	7.1	2.9	8.2	12.6	8.9
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	1,045,975	1,129,653
Less provisions	-33,309	-32,625	-34,963	-38,007	-43,165
Net loans	767,740	872,713	933,532	1,007,968	1,086,488
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	1,568,595	1,765,773	1,923,614
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	16,488	66,271	62,283
Total liabilities	1,165,569	1,186,466	1,286,413	1,463,138	1,598,787
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	263,010	283,442	305,612
Reserves for credit losses	0	0	0	0	0
Proposed dividends	0	0	0	0	0
Other equity	12,309	11,871	11,871	11,871	11,871
Shareholders' equity	242,356	262,641	281,971	302,403	324,573
Total liabilities and equity	1,408,107	1,449,301	1,568,595	1,765,773	1,923,614
Non-perf assets	14,198	15,528	16,686	18,021
Balance sheet ratios (%)
Loans to deposits	73.2	79.0	76.8	75.4	74.0
Equity to assets	17.2	18.1	18.0	17.1	16.9
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	0.48	0.58	0.72
Loss reserves/assets (%)	2.37	2.25	2.23	2.15	2.24
Loss reserves/NPAs (%)	234.6	210.1	209.5	210.9	–
Tier 1 capital ratio (%)	29.4	28.9	30.4	29.0	–
Total capital ratio (%)	29.4	28.9	30.4	29.0	–
Per share
Reported EPS (IDR)	394.56	444.83	456.71	473.66	499.18
Norm EPS (IDR)	394.56	444.83	456.71	473.66	499.18
FD norm EPS (IDR)	394.56	444.83	456.71	473.66	499.18
DPS (IDR)	212.50	277.50	299.90	307.91	319.34
PPOP PS (IDR)	506.53	569.88	609.06	641.30	690.39
BVPS (IDR)	1,965.98	2,130.52	2,287.33	2,453.08	2,632.91
ABVPS (IDR)	1,965.98	2,130.52	2,287.33	2,453.08	2,632.91
NTAPS (IDR)	1,965.98	2,130.52	2,287.33	2,453.08	2,632.91
Valuations and ratios
Reported P/E (x)	21.0	18.7	18.2	17.5	16.6
Normalised P/E (x)	21.0	18.7	18.2	17.5	16.6
FD normalised P/E (x)	21.0	18.7	18.2	17.5	16.6
Dividend yield (%)	2.6	3.3	3.6	3.7	3.8
Price/book (x)	4.2	3.9	3.6	3.4	3.2
Price/adjusted book (x)	4.2	3.9	3.6	3.4	3.2
Net interest margin (%)	5.89	6.17	6.25	5.98	5.83
Yield on assets (%)	6.86	7.11	7.11	6.84	6.67
Cost of int bearing liab (%)	1.14	1.11	1.00	1.00	1.00
Net interest spread (%)	5.72	6.00	6.11	5.83	5.67
Non-interest income (%)	24.8	24.0	23.1	22.3	21.2
Cost to income (%)	37.5	35.1	34.6	34.5	33.8
Effective tax rate (%)	19.1	19.6	20.0	20.0	20.0
Dividend payout (%)	53.9	62.4	65.7	65.0	64.0
ROE (%)	21.0	21.7	20.7	20.0	19.6
ROA (%)	3.57	3.84	3.73	3.50	3.34
Operating ROE (%)	26.0	27.0	25.9	25.0	24.5
Operating ROA (%)	4.42	4.77	4.67	4.38	4.17
Source: Company data, Verdhana estimates

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 IDR10,100 using DuPont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.9x and a CAR-adjusted ROAE of 24.5%. Our TP implies 4.1x FY26F P/B and 21.3x FY26F 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.

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

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.

This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

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Rating Table

Rating Remains	Buy
Target price Reduced from IDR 12,300	IDR 10,100
Closing price 15 December 2025	IDR 8,300
Implied upside	+21.7%
Market Cap (USD mn)	60,801.4
ADT (USD mn)	71.0

Stock performance chart

Source: LSEG, Verdhana

M cap (USDmn)	60,801.4
Free float (%)	45.1
3-mth ADT (USDmn)	71.0

(%)	1M	3M	12M
Absolute (IDR)	-1.5	3.4	-17.4
Absolute (USD)	-1.3	1.8	-20.7
Rel to Jakarta Stock Exchange Composite Index	-4.9	-5.7	-35.6

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: BANKS, Bank Central Asia, BBCA, BBCA JK, BBCA IJ, Erwin Wijaya

BBCA TP Derivation	New	OLD	Remarks
Risk free rate %	6.50	6.50
Equity risk premium %	7.80	7.80
Beta (x)	0.90	0.80	up from 0.80x
Cost of capital %	13.52	12.70
Growth rate (2-yr Cagr) %	10.00	10.00
CAR-adj ROAE %	24.50	24.50
12m fwd BVPS (IDR)	2,454	2,287	from FY25F BVPS to FY26F
Target PB x	4.1	5.4
Implied PER x	21.3	26.9
Implied share price (IDR)	10,110	12,279	Rounded to IDR10,100 (from IDR12,300)

Bank Central Asia (BBCA IJ) (Buy) - Slower growth pace

Slower growth pace

Key data on Bank Central Asia

Fig. 1: BBCA – New P&L forecasts

Fig. 2: BBCA – Loan assumptions

Fig. 3: BBCA – Profit growth y-y %

Fig. 4: BBCA – ROAE x ROAA

Fig. 5: BBCA – CAR x Leverage ratio

Fig. 6: BBCA – Valuation

Rating Table

Stock performance chart

Research Analysts

yudi Administrator

Bank Central Asia BBCA IJ - Buy - Solid YTD Jul-24 results

Bank Rakyat Indonesia -BBRI IJ- Buy - Towards more commercial micro

Bank Negara Indonesia BBNI IJ - Buy - Operating 1H24 results were below

Bank Rakyat Indonesia -BBRI IJ- Buy - YTD Jul-24 bank only results - steady progress

Bank Rakyat Indonesia -BBRI IJ- Buy - ROAE uptrend on positive micro trends

Bank Central Asia -BBCA IJ- Buy - Steady growth reiterate Buy new TP IDR13200

Bank Central Asia (BBCA IJ) (Buy) - Slower growth pace

Fig. 1: BBCA – New P&L forecasts

Fig. 2: BBCA – Loan assumptions

Fig. 3: BBCA – Profit growth y-y %

Fig. 4: BBCA – ROAE x ROAA

Fig. 5: BBCA – CAR x Leverage ratio

Fig. 6: BBCA – Valuation

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