BBCA The CASA Ratio Finally Turned Around. Profit Growth Didn't Follow.

The Funding Side Got Better. The Credit Side Got Worse.

BCA's FY2014 post ended on a warning: the CASA^» ratio - the entire structural basis of this bank's cheap-funding advantage - had fallen for a second straight year, from 80.3% (2012) to 78.9% (2013) to 75.1% (2014). FY2015 answers that specific question, and answers it well: the CASA ratio reversed, rising to 76.1% - the first improvement since the 2012 peak. That's a genuine structural positive, and it arrived in a year that gave Indonesian banks every reason to keep sliding the other way.

2015 was rough. China's currency devaluation in August triggered a fresh emerging-market selloff, and the rupiah - already weakened by the prior year's taper-tantrum aftershocks - fell another 10.2% against the US dollar over the year, touching a low of roughly Rp14,693/USD in September before recovering somewhat to close the year near Rp13,788/USD. Bank Indonesia held its policy rate at 7.5% for most of the year specifically to defend the currency. Indonesia's banking system as a whole saw loan growth slow to single digits, third-party funding growth weaken alongside it, and the industry-wide NPL^» ratio climb from 2.2% to 2.5%.

Against that backdrop, BCA's headline numbers still look strong - and relative to its own industry, genuinely stand out: Indonesia's national banking sector's aggregate net income fell 6.3% in 2015, the first annual decline the sector had seen in five years, as system-wide operating expenses (including NPL provisioning) rose 22.8% against just 11.2% growth in operating income. BCA went the other direction entirely - net income up 9.3% to Rp18,018,653 million (~$1.307B), loans up 11.4%, and a gross NPL ratio of just 0.7% against the industry's 2.5%. But the growth rate itself still tells a different story than 2014 did. Net income grew 15.7% in FY2014; it grew only 9.3% in FY2015, even though total operating income grew a healthy 15.7% this year too - a much wider gap between revenue growth and bottom-line growth than the FY2014 filing showed. The gap is almost entirely explained by one line: impairment losses on financial assets jumped 56.5% year-over-year, even as the bank's own gross NPL ratio moved by only a single tenth of a percentage point. This is a bank building loss-absorption capacity considerably faster than its loan book is actually souring - which is either smart, pre-emptive risk management for a bank whose entire model depends on cheap deposits staying cheap, or a signal that management saw something in the loan book that the headline NPL ratio hasn't caught up to yet.

The Prescription

BCA should keep the provisioning discipline it showed in 2015 - building loss-absorption capacity ahead of any visible deterioration in the NPL ratio, rather than waiting for a downturn to show up in the numbers before reserving against it - and should specifically extend that discipline to the corner of the loan book already flashing a warning: loans restructured in the shipping and river-transportation sector this year (see Beyond the Usual below), a segment tied directly to Indonesia's slumping commodity trade. Proactive provisioning is worth more when it's targeted at where the actual stress is emerging, not spread evenly across a book that's still 99.3% performing.

What it should stop doing: letting a one-off trading-book windfall pad the "total operating income growth" figure it presents without separating it out from the CASA-and-lending engine the whole valuation thesis actually depends on (see Beyond the Usual below for how much of this year's growth that windfall alone explains). A reader taking this year's operating-income growth rate at face value is crediting the core franchise with more than it actually delivered - management shouldn't let that distinction blur inside a single headline number.

Key Financial Metrics

FY2015 vs. FY2014 (P&L and balance sheet) - consolidated

FX: IDR 13,788 = USD 1 (December 31, 2015 close, Bank Indonesia reference rate, per BCA's own annual report disclosure).

This filing's FY2014 comparative figures are restated - both for a 2015 presentation-format change (splitting other comprehensive income into reclassifiable and non-reclassifiable items) and for a new accounting standard adopted in 2015 (see Beyond the Usual below) - so Total Assets here (Rp553,155,534M) differs slightly from the Rp552,423,892M originally reported in the FY2014 post. Both figures are genuine; they're just not built on an identical presentation basis.

Metric	FY2015 (IDR)	FY2015 (USD)	FY2014 (IDR, restated)	YoY
Net Interest and Sharia Income ("Net Revenue" equivalent)	Rp35,868,796M	~$2.60B	Rp32,026,694M	✅ +12.0%
Net fee and commission income	Rp8,355,779M	~$606M	Rp7,285,033M	✅ +14.7%
Net trading income	Rp2,107,067M	~$153M	Rp836,021M	⚠️ +152.0%
Other operating income	Rp1,544,530M	~$112M	Rp1,224,961M	✅ +26.1%
Total operating income	Rp47,876,172M	~$3.47B	Rp41,372,709M	✅ +15.7%
Impairment losses on financial assets	Rp3,504,995M	~$254M	Rp2,239,578M	⚠️ +56.5%
Total operating expenses (personnel, G&A, other)	Rp25,219,058M	~$1.83B	Rp20,631,588M	⚠️ +22.2%
Income before tax ("Operating Income" equivalent)	Rp22,657,114M	~$1.64B	Rp20,741,121M	✅ +9.2%
Net Income (attributable to parent)	Rp18,018,653M	~$1.31B	Rp16,485,858M	✅ +9.3%
EPS	Rp731	~$0.053	Rp669	✅ +9.3%

Balance sheet metric	Dec 2015 (IDR)	Dec 2015 (USD)	Dec 2014 (IDR, restated)	YoY
Total Assets	Rp594,372,770M	~$43.1B	Rp553,155,534M	✅ +7.5%
Loans (net of allowance)	Rp378,616,292M	~$27.5B	Rp339,859,068M	✅ +11.4%
Total Deposits (Third Party Funds)	Rp473,666,215M	~$34.4B	Rp447,905,756M	✅ +5.8%
Total Liabilities	Rp504,747,830M	~$36.6B	Rp477,429,844M	➖ +5.7%
Total Equity	Rp89,624,940M	~$6.5B	Rp75,725,690M	✅ +18.4%

Operating cash flow and total cash are both available this year from the filed cash flow statement: operating cash flow fell to Rp29,459,026M from Rp35,136,527M the prior year (capital expenditure was Rp2,533,375M), mostly because loans receivable absorbed more cash this year - Rp39,703,557M versus Rp34,315,786M - consistent with the loan book actually growing faster in 2015. Cash and cash equivalents at year-end stood at Rp118,661,241M (~$8.61B), up sharply from Rp74,475,895M a year earlier, largely reflecting a Rp25.8 trillion cash inflow as the bank's securities-purchased-under-agreements-to-resell book was run down from Rp26,289,663M to just Rp515,099M over the year.

A bank whose credit-cost line grew four times faster than its own default rate isn't necessarily hiding a problem - but it is telling you where management's own risk read differs from what the ratio table shows.

Key Operational Metrics

All ratios below are bank-only (non-consolidated), as disclosed in BCA's own five-year ratio table, matching the basis used in the FY2014 post:

• CASA ratio: 76.1% (2015) vs. 75.1% (2014) ✅ - the first annual improvement since the 2012 peak of 80.3%, reversing the two-year decline flagged in the FY2014 post, and arriving in a year the rest of the banking system had every reason to see funding costs rise.
• Loan to Funding Ratio^»: 81.1% (2015) vs. 76.8% (2014) - continuing the five-year uptrend from 61.7% (2011), now labeled "LFR" rather than "LDR" in BCA's own disclosure, reflecting a 2015 regulatory shift to a broader funding base (including issued bonds) in the ratio's denominator, not a change in what BCA is actually doing.
• NIM^»: 6.7% (2015) vs. 6.5% (2014) ✅ - improved for a second straight year despite loan growth accelerating, meaning BCA is pricing risk (or benefiting from asset mix) well enough to keep margins expanding through a slowing economy.
• ROA^»: 3.8% (2015) vs. 3.9% (2014) ➖ - essentially flat.
• ROE^»: 21.9% (2015) vs. 25.5% (2014) ⚠️ - the fifth consecutive annual decline (33.5% in 2011, 30.4% in 2012, 28.2% in 2013, 25.5% in 2014, 21.9% in 2015), the same mechanical trend flagged in the FY2014 post continuing on schedule - equity keeps compounding faster than net income.
• CAR^»: 18.7% bank-only (2015) vs. 16.9% (2014) ✅ - a sizeable improvement, aided industry-wide by a 2015 regulatory change that let banks count 100% of current-year net income toward core capital, versus only 50% previously (per BCA's own disclosure of the national banking-sector picture).
• BOPO^»: 63.2% (2015) vs. 62.4% (2014) - a slightly worse cost-to-income read on the regulator's broad definition, continuing the same gradual drift the FY2014 post noted.
• NPL - gross (bank-only): 0.7% (2015) vs. 0.6% (2014); NPL - net: 0.2% (2015) vs. 0.2% (2014). Provision coverage against total NPLs stood at 322.2% (2015) vs. 324.2% (2014) - essentially flat, meaning the 56.5% jump in the impairment-loss expense line went almost entirely toward keeping pace with loan-book growth and building a buffer, not toward covering a coverage-ratio shortfall.
• Not available in this filing: quarterly transacting-user counts and a securities-book maturity ladder - neither was broken out at a level this series can independently verify yet.

Beyond the Usual

A trading-book windfall did a fifth of this year's income growth

Net trading income more than doubled year-over-year (+152.0%, from Rp836,021M to Rp2,107,067M), the single fastest-growing line in the entire income statement - almost certainly a function of the rupiah's extreme 2015 volatility (a 10.2% depreciation over the year, with a much sharper intra-year swing) rather than a repeatable trading or client-flow business. That Rp1,271,046M increase alone accounts for roughly 20% of the Rp6,503,463M total increase in operating income this year. It's a genuine, disclosed gain - not a fabricated one - but a reader taking "total operating income up 15.7%" at face value is crediting the CASA-and-lending engine with growth that materially came from a currency-crisis-driven trading gain instead.

Restructured loans nearly tripled, concentrated in one shipping subsector

Total restructured loans outstanding jumped from Rp1,231 billion to Rp3,069 billion (+149.3%) - and every bit of that net increase, and then some, landed in the still-"Current" collectability category: Current-rated restructured loans alone rose from Rp152 billion to Rp2,085 billion (+1,271.7%, a more than thirteen-fold increase), while restructured loans already sitting in a non-performing category actually fell 41.8% (from Rp701 billion to Rp408 billion). BCA's own materials attribute the bulk of 2015's corporate and commercial restructuring activity to the sea and river transportation services industry - a segment directly exposed to Indonesia's commodity and coal-trade slowdown that year. A loan reclassified as "restructured" but still rated "Current" doesn't show up anywhere in the headline 0.7% gross NPL ratio, which is exactly why this is worth watching rather than ignoring: it's a leading indicator sitting one layer beneath the ratio a reader would otherwise use to judge asset quality.

A retroactive accounting change shrank 2014's opening equity by Rp1.6 trillion

BCA adopted a revised employee-benefits accounting standard (PSAK No. 24, 2013 Revision) on January 1, 2015, which required actuarial gains and losses on the bank's pension obligations to be recognized immediately against equity rather than smoothed into future periods. Applying the new standard retroactively cut the bank's January 1, 2014 retained earnings by Rp1,634,264 million (net of tax) - a real, disclosed accounting change, not a restatement of any year's actual profit, but a reminder that the equity base a reader compares across annual reports written before and after a standard change isn't built on quite the same foundation.

Java carries 87% of the balance sheet and virtually all of the profit

This filing includes BCA's first geographic segment breakdown in this series: of Rp594.4 trillion in consolidated assets, Java accounts for Rp518.7 trillion (87.3%), and of Rp22.7 trillion in consolidated pre-tax income, Java accounts for Rp19.8 trillion (87.4%) - Sumatra, Kalimantan, Eastern Indonesia, and overseas operations combined contribute the remaining eighth. This isn't a surprise for Indonesia's largest private bank headquartered in Jakarta, but it's a useful, previously-undisclosed number for sizing how concentrated BCA's entire growth story actually is in one island's economy.

The lease at the center of the related-party network runs through 2035

BCA's related-party disclosure again lists dozens of companies under common ultimate ownership with its controlling shareholder - including PT Djarum, PT Sarana Menara Nusantara (Protelindo's parent), PT Hartono Istana Teknologi, and PT Grand Indonesia, the same conglomerate network flagged in the FY2014 post - with related-party loans now at 0.24% of the total loan book (up from 0.16% in 2014). New detail this year: BCA's own head-office tower space is leased from PT Grand Indonesia under a long-term agreement signed in 2006, running from July 2007 through June 2035, covering 28,166.88 square meters plus an additional 3,264.80 square meters taken up as an option, at a combined contracted value of roughly USD 39.7 million (including VAT) for the space. BCA's own corporate headquarters sits on a lease from a company owned by the same family that owns the bank - a detail that's fully disclosed, individually immaterial to a bank this size, and yet a clean illustration of how thoroughly BCA's physical and financial infrastructure is intertwined with its controlling shareholder's wider industrial group.

Target Valuation Range

P/E of ~18.2x and P/B of ~3.67x, implying a market cap of ~Rp327,912B (~$23.78B) - fairly valued for what it is, only slightly above FY2014's P/E despite a five-year straight decline in ROE, priced by a market that's betting the CASA reversal and disciplined provisioning matter more than the decelerating growth rate.

BCA's shares closed at approximately Rp13,300 on December 30, 2015 (public market price on the Indonesia Stock Exchange; converted from BCA's post-split share count and adjusted for the company's later 1:5 stock split in October 2021, since price data pulled today for this period reflects that split retroactively) - up just 1.3% from Rp13,125 a year earlier, a far more muted single-year move than the growth in either EPS (+9.3%) or book value per share this year.

Market cap → book value	FY2015
Share price (period-end)	Rp13,300
Shares outstanding	24,655,010,000
Market capitalization	Rp327,912B (~$23.78B)
Book value (equity attributable to parent)	Rp89,369B (~$6.48B)
P/B	~3.67x

P/E and P/B	FY2014	FY2015	Change
EPS (full-year trailing)	Rp669	Rp731	✅ +9.3%
P/E	~19.6x	~18.2x	✅ down
Book value per share	~Rp3,151	~Rp3,625	✅ +15.0%
P/B	~4.17x	~3.67x	✅ down

Both multiples cooled slightly from FY2014's, but neither is cheap in absolute terms - the arithmetic case still rests on a 21.9% ROE, which is high for any bank but is also the lowest this series has recorded and the fifth straight year of decline (see Key Operational Metrics). A full DCF isn't attempted here - two annual filings still isn't enough of a track record to responsibly model a multi-year loan growth and margin trajectory, and a fabricated-precision DCF from this little history would be worse than none at all. Share price moved a solid +34.0% from Rp9,925 (Jan 2014, split-adjusted and reconstructed to nominal terms) to Rp13,300 (Dec 2015) over the trailing two years, but with a real mid-2015 wobble along the way - a 17.2% peak-to-trough drawdown from a Rp14,825 high in March 2015 to a Rp12,275 low in September 2015, tracking almost exactly the rupiah's own worst month of the year. Not the kind of dislocation that needs a dedicated section on its own, given the two-year window still closed well ahead of where it started.

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