The Tax Amnesty Ended. The Old Trend Came Right Back.
The FY2016 post closed on a specific, testable worry: the gross NPL» ratio's first-ever sequential improvement (1.5% to 1.3%) arrived in the same year a one-off tax-amnesty inflow flattered deposit growth, "which makes 2017's numbers the real test of whether either improvement is durable." Q1 2017 answers that question fast, and not kindly: the gross NPL ratio jumped straight back to 1.5%, erasing Q4's entire gain in a single quarter, while the CASA» ratio - the metric the tax amnesty had been propping up - slipped for the first time this series has recorded.
This is BCA's Q1 2017 report (period ended March 31, 2017), covering the exact quarter Indonesia's national tax amnesty program ran its third and final phase before expiring on March 31, 2017. Bank Indonesia was still forecasting 5.0-5.4% GDP growth for the year and holding its policy rate steady at 4.75%, with inflation cooling to 3.6% from 4.4% a year earlier - a stable macro backdrop, which makes the balance-sheet wobble below harder to blame on the broader economy.
Net profit still grew - 10.7% year-over-year to Rp4,990 billion (consolidated, ~$374.5M), per BCA's own presentation - and that's the tension worth sitting with: profit growth looked identical to Q4's headline story, but it was propped up by a smaller provisioning charge, not a healthier loan book. Loan-loss provisioning collapsed 74.9% year-over-year (Rp989 billion to Rp248 billion) in the same quarter total non-performing loans hit a new nominal high of Rp6,025 billion, up 49.6% YoY - and coverage of that bad-debt stock fell to 203.3% from 229.4% just one quarter earlier (see Beyond the Usual). A reader taking "net profit +10.7%" at face value would miss that the bank spent down reserves to get there rather than genuinely lending its way to a cleaner book.
The Prescription
BCA should report the loan-collectability bucket breakdown (Current / Special Mention / Substandard / Doubtful / Loss) as a fixed, unconditional line in every single quarterly disclosure - not just when a filing happens to include it, and not folded into a single "NPL ratio" headline. This quarter's data shows exactly why the bucket-level view matters more than the summary ratio: the ratio rose because loans piled into "Special Mention" and "Substandard" (the early-warning categories), while the worst "Loss" bucket actually improved quarter-over-quarter - a materially different story than "asset quality worsened," and one a reader can only see by looking past the single headline number.
What it should stop doing: letting a shrinking provisioning charge do the work of flattering net income in a quarter where the underlying bad-debt stock hit a new high. Coverage above 100% means BCA isn't in danger, but a bank that just watched total NPL grow 49.6% YoY choosing to cut its provisioning charge by nearly three-quarters in the same quarter is drawing down a buffer, not managing risk conservatively. A profit number built on thinner reserves against a growing bad-debt pile is borrowed strength, not earned strength.
Key Financial Metrics
Q1 2017 vs. Q1 2016 (P&L and balance sheet) - bank-only/individual, the basis for which an actual filed statement exists this quarter
FX: IDR 13,326 = USD 1 (March 31, 2017, per BCA's own corporate presentation).
BCA's own consolidated financial statements weren't filed as a standalone document this quarter - only the bank's unaudited individual (bank-only) statement was, alongside the investor presentation. The table below uses that filed individual statement, which is the actual source document available for this period; consolidated headline figures (net profit, EPS) are noted separately below, sourced explicitly to the presentation.
| Metric | Q1 2017 (IDR) | Q1 2017 (USD) | Q1 2016 (IDR) | YoY |
|---|---|---|---|---|
| Net Interest Income ("Net Revenue" equivalent) | Rp9,343,164M | ~$701.1M | Rp9,163,785M | ✅ +2.0% |
| Non-interest operating income | Rp4,708,487M | ~$353.3M | Rp5,792,809M | ⚠️ -18.7% |
| Non-interest operating expense | Rp8,214,673M | ~$616.4M | Rp9,694,092M | ✅ -15.3% |
| Pre-tax income ("Operating Income" equivalent) | Rp5,836,978M | ~$438.0M | Rp5,262,502M | ✅ +10.9% |
| Net Income (bank-only) | Rp4,668,383M | ~$350.3M | Rp4,218,657M | ✅ +10.7% |
| Balance sheet metric | Mar 2017 (IDR) | Mar 2017 (USD) | Mar 2016 (IDR) | YoY |
|---|---|---|---|---|
| Total Assets | Rp674,303,286M | ~$50.60B | Rp590,832,305M | ✅ +14.1% |
| Loans | Rp408,909,629M | ~$30.68B | Rp373,776,427M | ✅ +9.4% |
| Total Deposits (Third Party Funds) | Rp535,179,499M | ~$40.16B | Rp470,471,110M | ✅ +13.8% |
| Total Liabilities | Rp559,840,468M | ~$42.01B | Rp492,860,684M | ➖ +13.6% |
| Total Equity | Rp114,462,818M | ~$8.59B | Rp97,971,621M | ✅ +16.8% |
Both the individual figures above and BCA's presentation agree on the headline direction: the presentation states consolidated and bank-only net profit "each grew 10.7% YoY," with total consolidated net profit of Rp4,990 billion (~$374.5M, EPS Rp202) against total bank-only net profit of "Rp4.7 trillion" - which matches the Rp4,668,383M individual figure in the table above almost exactly, a useful cross-check that the two sources agree.
The non-interest income swing deserves a second look: it fell 18.7% YoY, driven almost entirely by "recovery of impairment" income collapsing from Rp2,647,165M to Rp1,443,071M - the mirror image of the provisioning-expense story above. Both sides of the P&L moved the same direction this quarter: less impairment expense booked, less impairment recovery booked too, netting out to a smaller overall credit-cost drag than a year earlier despite a larger bad-debt stock.
Every metric in this filing still shows growth - the one number that reversed is the one the whole FY2016 narrative hinged on: whether last year's bad-loan improvement was real, and it wasn't durable past a single quarter.
Key Operational Metrics
All ratios below are bank-only (non-consolidated), matching the basis used in every prior post in this series:
- CASA ratio: 75.8% (Mar 2017) vs. 76.9% (Mar 2016) ⚠️ - the first year-over-year decline this series has recorded, and a drop from 77.0% just one quarter earlier at FY2016. Time Deposits grew 19.4% YoY to Rp129.7 billion, outpacing CASA's 12.1% growth - the opposite mix shift from what funded FY2016's celebrated CASA gain, and it lands in the exact quarter the tax amnesty program that drove that gain expired.
- Loan to Funding Ratio» (LFR): 75.1% (Mar 2017) vs. 78.9% (Mar 2016) ⚠️ - continuing the multi-quarter decline the FY2016 post already flagged, funding still outrunning loan growth.
- NIM»: 6.3% (Mar 2017) vs. 7.0% (Mar 2016) ⚠️ - a 70bp compression, worse than FY2016's essentially-flat full-year read; lower earning-asset yields (loan repricing lower, per BCA's own disclosure) outpaced the benefit of falling funding costs this quarter.
- ROA»: 3.5% (Mar 2017) vs. 3.6% (Mar 2016) ⚠️ - a slight decline.
- ROE»: 17.1% (Mar 2017) vs. 19.3% (Mar 2016) ⚠️ - a 220bp drop, continuing the multi-year ROE decline this series has tracked every year since 2011.
- CAR» (credit, market and operational risk): 23.1% (Mar 2017) vs. 20.0% (Mar 2016) ✅ - the capital buffer keeps building regardless of the asset-quality wobble.
- NPL ratio - gross: 1.5% (Mar 2017) vs. 1.1% (Mar 2016) and vs. 1.3% (Dec 2016) ⚠️ - see Beyond the Usual. NPL ratio - net: 0.4% (Mar 2017) vs. 0.3% (both prior periods).
- Provision/NPL coverage: 203.3% (Mar 2017) vs. 235.0% (Mar 2016) and 229.4% (Dec 2016) ⚠️ - a fourth consecutive point of erosion in a ratio this series has now watched fall from 322.2% (Dec 2015).
- Cost Efficiency Ratio (bank-only opex over interest-plus-fee income): 52.8% (Mar 2017) vs. 49.6% (Mar 2016) ⚠️ - both Q1 readings are seasonally elevated by the annual employee-bonus accrual (per BCA's own disclosure); FY2016's full-year figure was a much lower 43.9%, so this isn't a new deterioration, just the same seasonal pattern repeating a year later.
- BOPO» (cost-to-income, the regulator's broader definition including provisioning): 65.2% (Mar 2017) vs. 69.7% (Mar 2016) ✅ - improved YoY specifically because this broader measure captures the drop in provisioning expense that the narrower Cost Efficiency Ratio above doesn't.
- Special Mention loans (the tier just below "Current," an early-warning signal rather than an NPL): Rp8,235 billion (Mar 2017), up 27.8% quarter-over-quarter and 29.2% year-over-year from Rp6,376 billion (Mar 2016) - a bigger percentage jump than the NPL ratio itself, worth watching next quarter.
- National banking sector context: system-wide gross NPL rose to 3.2% (Feb 2017) from 2.9% (Dec 2016), per Bank Indonesia/OJK data cited in BCA's own presentation, alongside 8.6% YoY sector loan growth - BCA's own reversal is happening alongside a broader system-wide uptick, not an isolated problem specific to this bank.
Segment Performance
BCA reports three lending segments (bank-only): Corporate, Commercial & SME, and Consumer. All figures below are bank-only, per BCA's own investor materials, since no filed consolidated statement breaks loans out this way this quarter.
Corporate
Corporate loans reached Rp152,566 billion (Mar 2017), up 17.9% YoY but down 1.5% from Dec 2016 - the segment that drove FY2016's Q4 reversal giving back a small, seasonal slice of that gain. Corporate remains the segment with the highest NPL exposure of the three (per BCA's own NPL-by-segment chart), consistent with every prior quarter in this series. Within Corporate, industry concentration held essentially flat - the top-10 sector list is unchanged in composition, with Distributor/Wholesaler/Retailer exposure ticking up to 7.9% of the corporate-commercial-SME book (from 6.5% a year earlier) as the single largest mover.
Commercial & SME
Commercial & SME loans reached Rp144,670 billion (Mar 2017), up just 1.7% YoY and down 4.7% from Dec 2016 - the weakest of the three segments on both counts. BCA's own materials attribute the quarter-to-date contraction to repayment of commercial and SME working-capital facilities, the same seasonal pattern the Q1 2016 post recorded for the loan book as a whole a year earlier - Q1 is structurally a repayment-heavy quarter for this segment, not a demand slowdown.
Consumer
Consumer loans reached Rp111,674 billion (Mar 2017), up 9.4% YoY and 1.9% YTD - the only segment to grow both YoY and YTD this quarter, continuing its run as the most consistent grower in this series. Mortgages (Rp66,084 billion, +10.4% YoY) remain the largest sub-book at 59.2% of consumer lending, though mortgage NPL ticked up to 0.9% from a historical 0.7% - still the healthiest sub-book by a wide margin, but no longer flat. Credit cards grew 10.7% YoY to Rp10,518 billion but actually fell 2.4% quarter-over-quarter from Dec 2016's Rp10,779 billion; vehicle loans (bank-only plus BCA Finance/CS Finance subsidiary bookings) reached a combined Rp120,588 billion, up 10.1% YoY.
Segment Comparison
| Segment | Mar 2017 (Rp bn) | Dec 2016 (Rp bn) | Mar 2016 (Rp bn) | YTD | YoY | Share (Mar 2017) |
|---|---|---|---|---|---|---|
| Corporate | 152,566 | 154,872 | 129,412 | ⚠️ -1.5% | ✅ +17.9% | 37.3% |
| Commercial & SME | 144,670 | 151,852 | 142,307 | ⚠️ -4.7% | ✅ +1.7% | 35.4% |
| Consumer | 111,674 | 109,555 | 102,057 | ✅ +1.9% | ✅ +9.4% | 27.3% |
| Total | 408,910 | 416,279 | 373,776 | ⚠️ -1.8% | ✅ +9.4% | 100% |
The overall book contracted 1.8% quarter-to-date - the same seasonal Q1 pattern the Q1 2016 post recorded a year earlier (loans shrank 3.6% QoQ then), now driven by Commercial & SME repayments rather than a broad pullback. Consumer is the only segment carrying real momentum on both a YoY and YTD basis; Corporate's YoY strength is still almost entirely a base effect from Q4 2016's seasonal disbursement surge, not fresh Q1 growth.
Beyond the Usual
The only source documents available for this quarter are BCA's bank-only regulatory publication (a bare four-page balance sheet, income statement, and commitments schedule with no notes) and its investor presentation - neither is a footnoted quarterly or annual report, so there's no off-balance-sheet, related-party, or lease-commitment disclosure to mine this time. The findings below come from what the presentation's own data actually shows, not footnote-mining.
The Worst Bad-Loan Bucket Actually Improved, While the Headline Ratio Got Worse
Loans classified "Loss" (bank-only, the single most severe collectability category) fell to Rp4,125 billion at Mar 2017, down from Rp4,394 billion at Dec 2016 - the exact opposite of the pattern the FY2016 post flagged, where the worst bucket kept climbing even as the headline ratio improved. This quarter it's reversed: the headline gross NPL ratio rose (1.3% to 1.5%) entirely because loans piled into the less-severe "Substandard" category, which more than doubled quarter-over-quarter (Rp535 billion to Rp1,282 billion), while "Special Mention" - the tier below any NPL classification - jumped 27.8% QoQ to Rp8,235 billion. Read together, this looks less like existing bad loans deteriorating further and more like a fresh wave of loans newly slipping out of "Current" - a different, and arguably earlier-stage, problem than the one flagged at FY2016.
A 75% Drop in Provisioning Expense Financed This Quarter's Profit Growth
BCA's provisioning charge fell to Rp248 billion in Q1 2017 from Rp989 billion in Q1 2016 - a 74.9% year-over-year decline - in the same quarter total NPL (Rp6,025 billion) hit a new nominal high, up 49.6% YoY, and provision/NPL coverage fell to 203.3% from 229.4% just one quarter earlier. Coverage above 100% means the bank remains reserved ahead of its currently-recognized bad debt, so this isn't a solvency concern, but a shrinking provisioning charge is doing real work in this quarter's 10.7% net profit growth: had BCA provisioned at anywhere close to Q1 2016's rate against a loan book that's actually gotten worse by every other measure this quarter, that profit growth would look meaningfully smaller.
A Credit Card NPL Methodology Change Makes This Quarter's Figure Non-Comparable to Earlier Ones
BCA's presentation discloses, for the first time in this series, that credit card NPLs are now calculated "on an aggregate basis" - a customer holding multiple credit cards has all of their cards downgraded to non-performing if any one card becomes delinquent - reversing the prior individual-card-basis calculation. This mechanically inflates the reported credit-card NPL ratio relative to every earlier quarter this series has covered, independent of any actual change in repayment behavior. It's a legitimate, disclosed methodology change, not a sign of worse underlying repayment behavior on its own, but it means the credit-card NPL trend can't be read as a clean like-for-like series across this series from this quarter forward.
Moody's Turned More Positive on BCA the Same Quarter Its Own Asset-Quality Metrics Turned Worse
Moody's revised its outlook on BCA to "Positive" in February 2017 (from "Stable"), while Fitch held its own outlook steady at "Stable" with an unchanged AAA(idn) local long-term rating. The timing is a genuine curiosity worth sitting with rather than resolving: a rating agency turned more constructive on the bank in the same quarter its gross NPL ratio, Special Mention loans, and provisioning coverage all moved in the less favorable direction - a reminder that credit-rating outlooks are built on a longer time horizon (capital strength, franchise durability) than a single quarter's asset-quality wobble, not a contradiction that needs explaining away.
Target Valuation Range
P/E of ~19.4x and P/B of ~3.45x, implying a market cap of ~Rp408,040B (~$30.62B) - modestly rich, not overvalued outright; both multiples ticked up slightly this quarter even as the bank's own asset-quality metrics moved the wrong way, meaning the market didn't demand a discount for the NPL reversal above.
BCA's shares closed at approximately Rp16,550 on March 31, 2017 (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 6.8% from Rp15,500 at the end of FY2016.
| Market cap → book value | Q1 2017 |
|---|---|
| Share price (period-end) | Rp16,550 |
| Shares outstanding | 24,655,010,000 |
| Market capitalization | Rp408,040B (~$30.62B) |
| Book value (consolidated BVPS × shares) | Rp118,122B (~$8.86B) |
| P/B» | ~3.45x |
| P/E and P/B | FY2016 | Q1 2017 | Change |
|---|---|---|---|
| EPS (trailing) | Rp836 | Rp855 | ✅ up |
| P/E» | ~18.5x | ~19.4x | ⚠️ up |
| Book value per share | Rp4,560 | Rp4,791 | ✅ +5.1% |
| P/B» | ~3.4x | ~3.45x | ⚠️ up slightly |
Share price moved +11.6% from Rp14,825 (Mar 2015, split-adjusted and reconstructed to nominal terms) to Rp16,550 (Mar 2017) over the trailing two years - a real but unremarkable move that stays below the threshold for its own dedicated section, with (as the FY2016 post already noted) virtually the entire two-year gain concentrated in the Q3 2016 rally rather than a steady climb. As in every prior post in this series, a full DCF isn't attempted here - a bank whose funding side just lost a one-off policy tailwind and whose asset-quality trend just reversed direction in a single quarter is exactly the wrong subject for a model that projects multi-year stability from a thin base of filings.
PT Bank Central Asia Tbk's unaudited individual (bank-only) financial statements as of March 31, 2017, published under Indonesia's OJK monthly bank-disclosure requirement; BCA's corporate presentation for the Q1 2017 analysts' meeting, dated April 20, 2017; and, for the Q1 2016 individual comparative figures, BCA's unaudited consolidated financial statements as of March 31, 2016 (bank-only column).