Bank Central Asia
Anyone planning to stress test southeast Asia’s biggest economy could do worse than look at where Bank Central Asia finds itself today compared with 1997.
The Asian financial crisis was an existential moment for the entire Indonesian economy, but BCA was especially on the brink. In 1998, the same year that president Suharto was ousted during violent protests, BCA was taken over by the Indonesian Bank Restructuring Agency.
But 23 years later, BCA is emblematic of a very different phenomenon – Indonesia’s stability, even as a far bigger reckoning upends Asia markets. Although the Covid-19 crisis is slamming top-line economic growth – the economy shrank 5.3% in the second quarter – the financial system is remarkably sound. And against even this backdrop, the bank remains a standout.
Publicly listed BCA, run by president director Jahja Setiaatmadja, wins Asiamoney’s best domestic bank honours again because no competitor comes close in terms of scale, ambition, asset quality, growth and focus in the fourth-most populous nation.
As of the end of March, its 17.1% asset growth dwarfed the 6.3% average among the top 10 banks in Indonesia. Its 12.1% loan growth is 30% above the industry average. At 1.6%, BCA’s non-performing loans tally is 68% below the average among its peers. The 15.6% return on equity also ranks favourably versus the 12.2% average of its 10 biggest peers.
But where BCA really excels is tapping into one of Asia’s youngest and fastest-growing consumer sectors.
At the centre of BCA’s efforts to pull more of the nation’s 268 million people into the financial system is a sophisticated payment-services ecosystem.
That is becoming more important by the day as coronavirus disruptions increase demand for remote banking. Even before the worst of the pandemic hit, 99% of customer transactions were done through BCA’s digital network, particularly mobile apps. BCA’s #BankingFromHome initiative is adding features at a remarkable rate.
At the same time, BCA is gaining business in ways few would have expected at the start of 2020, particularly in restructuring loans for borrowers that have struggled because of Covid-19.
The good news is that the country’s financial system is in far better shape than the one that collapsed like sand in the 1997 Asian financial crisis, the one that suffered capital outflows in 2008 in the global meltdown and the one that was forced to reassure investors anew in 2013 during the taper tantrum, or bout of panic-selling when investors learned that the US Federal Reserve was coming to the end of its quantitative easing. BCA is as good a microcosm as any of Indonesia’s resilience in a decidedly chaotic year.