BBCA released its 1H25 results, with headline profit of IDR29.0tn (+8% y-y), slightly ahead of our FY25F projection and accounting for ~51% of our FY25F earnings forecast. We attribute these resilient results primarily to stable funding costs despite still stubbornly tight liquidity in the banking system, and stable net interest margins (NIM) – driven by its strong transactional franchise. BBCA delivered loan growth of +13% y-y (+3.9% YTD), ahead of the banking sector’s growth. Most notably, in the corporate and commercial/SME segments, BBCA reported loan growth of +16% y-y (+5% YTD) and +12% y-y (+5% YTD) respectively, both well ahead of industry loan growth. Growth in these business-oriented loans are either for money-market and/or back-to-back loans with primary purposes for investments and working capitals. In the consumer segments, BBCA also reported loan growth of +8% y-y (+1% YTD). Loan utilization rates for corporates and SME segments inched up to ~80% and ~64% in 1H25 (implying ~100bp improvement y-y for both).

On asset yields, it remained largely stable at ~7.0%, where changes in earnings asset mix towards more loans offsetting a slight decline in loan yields. Meanwhile, on asset quality, management also highlighted a pickup in SML (special mention loans) particularly in the SME and Consumer segments. However, these loans are typically collateralized; hence, we don’t expect risks of a significant jump in credit costs. At present our CoC for FY25F is at 50bp – at the top end of the management guidance (vs 30bp in 1H25).

Post results, we reiterate our Buy rating on the stock with a TP of IDR12,300.

Consolidated results summary

● 2Q25 net interest income (NII) reached IDR21.5tn (+2% q-q; +7% y-y), bringing 1H25 NII to IDR42.6tn (+7% y-y) – accounting for ~48% of our FY25F projection. This implies 2Q25 NIM of 6.1% (+10bp y-y; flat q-q), as the bank benefited from changes in earnings asset mix towards higher yielding loans, which offset a marginal increase in the cost of funds. This has also offset lower yields for risk-free earnings assets. In 2H25F, we think BBCA will benefit further from potentially improvement in liquidity stemming from increased government spending.

● 2Q25 PPOP reached IDR19.3tn (+5% q-q; +9% y-y), which brings 1H25 PPOP to IDR37.8tn (+9% y-y) – representing ~50% of our FY25F PPOP estimates. The credit cost (CoC) was ~40bp (-10bp q-q; -10bp y-y).  

● 2Q25 profit reached IDR14.9tn (+5% q-q / +6% y-y), bringing 1H25 profit to IDR29.0tn (+8% y-y) – implying ~51% of our FY25F profit expectation. This implies ROAA of 3.9% and ROAE of 23.4% – highest amongst major banks. We expect these will persist into 2026F.

● On the balance sheet, BBCA reported loans +4% YTD / +2% q-q / +13% y-y and deposits +5% YTD / flat q-q / +6% y-y, implying a healthy LDR of 78.1% (+170bp q-q / +480bp y-y). Despite elevated yields for risk-free assets where it has attracted large deposit owners to seek higher yields, BBCA continued to see strong CASA +7% y-y; bringing CASA ratio at 82.5% – highest among Indonesian banks. This should enable it to keep competitive lending rates and cherry-pick quality borrowers, in our view. Strong profit and stable payout of ~60% will keep CAR elevated at >25% (compared to 1H25’s 29.1%), based on our calculations.

● On asset quality, the bank reported a slight uptick in NPL ratio to 2.1% (+10bp q-q / flat y-y), bringing NPL coverage to 174% (vs 187% in 1Q25 / 196% in 2Q24). Despite continued macro uncertainties, overall, LAR stood at 5.6% (-30bp q-q / -70bp y-y) – implying a healthy coverage of ~66% – among the highest within major banks. Still, some areas of concern where NPLs have been on the rise. Given BCA’s strong focus on transactional activities and/or trading activities suggest that some key areas to watch include sectors involving distribution/retails/supermarkets, textile/garment, and transportation/logistics. In the consumer sector, some NPL pressures come from autos and mortgages (particularly refinancing as some of these loans are used for business purposes).

Valuation and risks

We derive our TP of IDR12,300 using DuPont analysis, with these key parameters: 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 (vs current price valuation of 3.9x) and 26.7x FY25F P/E (vs current price valuation of 19.3x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Fig. 1: BBCA 1H25 summary %

Fig. 3: BBCA – blended loan yield 1Q22-2Q25 %

Fig. 9: BBCA – 12MMA Loan vs NII growth %

Fig. 10: BBCA – LLR vs 12MMA WO %

Fig. 11: BBCA – 12MMA CoC vs 12MMA WO %

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. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)