BBCA Why Did Net Profit Fall Even as Restructuring Stayed 'Current'?

The Streak Breaks

Every quarter this series has covered - back to Q1 2016 - has shown BCA's net income growing year-over-year. That streak ended in the second quarter of Indonesia's Covid-19 year: consolidated net income attributable to owners fell to Rp12,240,018 million for the six months ended 30 June 2020, down 4.8% from Rp12,861,707 million a year earlier. This isn't a revenue problem - operating income actually grew. Pre-Provision Operating Profit (PPOP^») rose 15.8% year-over-year to Rp21,531 billion (consolidated, per BCA's own investor presentation), a genuinely strong core-banking result driven by CASA-funded net interest income (+10.6% YoY) and a manageable non-interest-income line that, unlike Q1's gross-up, didn't need any unwinding this quarter. What ate the gain was provisioning: loan-loss provision expense (bank-only) jumped 167.3% year-over-year to Rp6,541 billion, with the second quarter alone (Rp4,362bn) more than doubling first-quarter's own already-elevated Rp2,179bn charge. BCA chose to eat the earnings hit up front rather than let the credit-cost story play out gradually - the same front-loading instinct Q1's post flagged when coverage nearly doubled to 229.8%.

The real story of this quarter, though, is what happened to the restructuring pipeline Q1's post flagged as guided toward 20-30% of total loans. It arrived - fast. Outstanding restructured loans (bank-only) hit Rp69.3 trillion at 30 June 2020, up 671.4% quarter-to-date from Rp9.0 trillion at March 2020 - and by BCA's own disclosure as of mid-July 2020 (a few weeks after the June close, but still inside this presentation's own reporting window), the pipeline had already reached Rp116 trillion, roughly 20% of total loans, from about 121,000 borrowers, with management reaffirming the 20-30%-by-year-end guidance from three months earlier. The gross NPL ratio, meanwhile, moved only modestly - from 1.6% (Mar 2020) to 2.1% (Jun 2020, bank-only, filed basis) - a gap between the disclosed restructuring scale and the reported delinquency rate that's the real subject of this post (see Beyond the Usual).

The Prescription

BCA should keep disclosing the restructuring pipeline's progress against its own guidance the way it did this quarter - going from "10-14% of loans, expected to reach 20-30%" in May to "Rp69.3tn (12% of loans) at quarter-end, Rp116tn (~20%) by mid-July" in the same presentation is exactly the kind of specific, falsifiable guidance a bank rarely volunteers mid-crisis, and it lets a reader track whether management's own read of the shock is holding up in real time. That transparency is worth more to a shareholder than a flattering NPL ratio.

What it should stop doing: leaning on the OJK's Covid-19 collectability relaxation to keep the bulk of the restructured book inside "Current" without giving equal visual weight, in its own materials, to the broader Loan-at-Risk figure that actually captures the risk. The presentation does disclose both the 2.1% NPL ratio and the 15.5% LAR-including-Covid-restructuring figure on the same slide - so the information is there - but the headline ratios BCA leads with elsewhere (in the Key Ratios table, in the loan-quality chart's own axis) are still built around the narrower NPL/LAR pre-Covid measures. A bank that already discloses the fuller number shouldn't make a reader hunt for it (see Beyond the Usual).

Key Financial Metrics

H1 2020 vs. H1 2019 (P&L, consolidated, unaudited interim OJK-format filing) and 30 Jun 2020 vs. 31 Dec 2019 (balance sheet, consolidated)

FX: IDR 14,255.0 = USD 1 (June 30, 2020, per BCA's own filed financial statements' Reuters middle-rate disclosure) - a modest 2.7% Rupiah depreciation from Dec 31, 2019's Rp13,882.5, but a genuine recovery from Q1 2020's own Rp16,310.0/USD rate, which had marked a 17.5% single-quarter Rupiah fall. IDR 14,127.5 = USD 1 is used for the Jun 2019 P&L comparative, per H1 2019's own disclosure basis.

Like Q1 2020's post, this is an unaudited interim OJK-format filing - a balance sheet, income statement, commitments and contingencies schedule, cash-flow statement, asset-quality schedule, and capital-adequacy calculation, but no narrative notes to the financial statements the way a full annual report carries. See Beyond the Usual for what the asset-quality and restructuring schedules turned up.

Metric	H1 2020 (IDR)	H1 2020 (USD)	H1 2019 (IDR)	YoY
Net Interest Income	Rp27,248,500M	~$1,911.6M	Rp24,631,355M	✅ +10.6%
Non-interest operating income (gross)	Rp13,957,387M	~$979.3M	Rp12,944,374M	✅ +7.8%
Pre-tax income	Rp14,990,105M	~$1,051.5M	Rp16,145,517M	⚠️ -7.2%
Net Income (attributable to owners)	Rp12,240,018M	~$858.7M	Rp12,861,707M	⚠️ -4.8%
EPS (half-year)	Rp496	~$0.0348	Rp522	⚠️ -4.8%

Unlike Q1 2020, the non-interest income line this half is a clean read - no large offsetting gross-up on the expense side distorts it. The -4.8% net income line is the real number, not an artifact.

Balance sheet metric	Jun 2020 (IDR)	Jun 2020 (USD)	Dec 2019 (IDR)	YTD
Total Assets	Rp975,076,433M	~$68.41B	Rp918,989,312M	✅ +6.1%
Third Party Funds	Rp761,604,000M*	~$53.43B	Rp704,791,000M*	✅ +8.1%
CASA	Rp575,974,000M*	~$40.41B	Rp532,013,000M*	✅ +8.3%
Total Loans (outstanding)	Rp595,136,000M*	~$41.75B	Rp603,743,000M*	⚠️ -1.4%
Total Equity (attributable to owners)	Rp169,170,382M	~$11.87B	Rp174,042,931M	⚠️ -2.8%

*Third Party Funds, CASA, and Total Loans (outstanding, including sharia financing and consumer-finance receivables) per BCA's own investor presentation, the same sourcing convention used since Sep 2019's post - the filed consolidated balance sheet's own "Kredit" line (Rp580,987,188M at Jun 2020) is narrower, excluding sharia financing (Rp5,713,918M) and consumer-finance/lease receivables (Rp8,435,063M) that the presentation's "Total Outstanding" figure includes.

Net income fell in both Rupiah and dollar terms this half - a genuine reversal, not Q1's currency-driven gap where Rupiah growth masked a dollar-terms decline. Equity also fell 2.8% YTD (a continuation of Q1's own 1.4% QoQ reversal), still weighed down by softer other comprehensive income on the securities portfolio. Loans contracted 1.4% YTD even as deposits grew 8.1% - a bank building liquidity rather than lending into the shock, the same posture Q1's post described taking shape.

Consolidated operating cash flow came in at Rp37,608,332M (~$2,638.9M), more than double H1 2019's Rp14,149,067M, as deposit inflows (Rp55,620,116M) far outpaced the cash consumed by net new lending (BCA's own loans line actually released Rp5,572,857M of cash this half, reflecting the loan-book contraction above). ✅ This is a genuine improvement over H1 2019, though one that reflects a bank pulling back on lending rather than growing it profitably. Cash and cash equivalents fell to Rp93,039,944M (~$6.53B) from Rp113,067,545M at the start of the year, as a large net purchase of investment securities (Rp89,108,343M) absorbed much of the operating inflow.

Key Operational Metrics

All ratios below are bank-only (individual) unless noted, from BCA's own filed financial-ratio disclosure - the same basis used in every prior post in this series:

• CASA ratio^»: per BCA's own investor-presentation consolidated figures, 75.6% (Jun 2020, Rp575,974bn / Rp761,604bn) vs 76.7% (Mar 2020) ⚠️ - a partial reversal of Q1's flight-to-CASA pattern, as time deposits grew 7.6% QoQ against CASA's own 1.3% QoQ growth; still above Dec 2019's 75.5%.
• LDR^»: 73.28% (Jun 2020, filed ratio) vs 77.64% (Mar 2020) ✅ - improved further as loans contracted while deposits kept growing, extending Q1's own improvement.
• NIM^»: 5.96% (Jun 2020, filed ratio) vs 6.24% (Jun 2019) ⚠️ - down 28bp YoY and 17bp from Mar 2020's 6.13%, continuing the mild compression policy rate cuts have driven through the pandemic.
• ROA^»: 3.12% (Jun 2020, filed ratio) vs 3.70% (Jun 2019) ⚠️ - down for a second straight quarter from Mar 2020's 3.17%.
• ROE^»: 15.62% (Jun 2020, filed ratio) vs 16.85% (Jun 2019) ⚠️ - down YoY, though essentially flat against Mar 2020's 15.56%.
• CAR^» (bank-only, credit, market and operational risk): 22.93% (Jun 2020, filed ratio) vs 23.58% (Jun 2019) ⚠️ - down 65bp YoY but up 43bp from Mar 2020's 22.50%; consolidated CAR reached 23.92%, still comfortably above the regulatory minimum.
• NPL ratio - gross: 2.08% (Jun 2020, filed ratio) vs 1.41% (Jun 2019) ⚠️ and vs Mar 2020's 1.60% - the sharpest single-quarter worsening this series has recorded, though still modest against the scale of restructuring disclosed (see Beyond the Usual). NPL ratio - net: 1.05% (Jun 2020) vs 0.52% (Jun 2019), also up.
• BOPO^»: 66.59% (Jun 2020, filed ratio) vs 62.59% (Jun 2019) ⚠️ - up 400bp YoY, though down sharply from Mar 2020's seasonally-inflated 77.09% as the personnel-expense front-load reversed (see Beyond the Usual).
• Loan-loss coverage (Provision/NPL, bank-only): 204.5% (Jun 2020) vs 183.7% (Jun 2019) ✅ but down from Mar 2020's 229.8% ⚠️ - coverage eased exactly as the restructuring wave it was built for actually arrived (see Beyond the Usual).
• Loan at Risk^» (NPL + Special Mention + restructured-current loans, as a share of total loans): 5.3% (Jun 2020) vs 4.7% (Mar 2020), per BCA's own disclosure - but 15.5% including Covid-19 restructured loans, up from a negligible pre-Covid gap at Mar 2020, the single most important number this quarter (see Beyond the Usual).
• NSFR^»: 156.21% (individual) at Jun 2020, down from Mar 2020's 160.80% and Jun 2019's 158.33%, still comfortably above the 100% regulatory minimum.
• Liquidity Coverage Ratio (individual): 309.05% (Jun 2020) vs 290.23% (Mar 2020) and 275.96% (Jun 2019) - liquidity buffers kept building even as the credit-cost story worsened.

Segment Performance

BCA reports three lending segments (consolidated, per this quarter's investor presentation): Corporate, Commercial & SME, and Consumer.

Corporate

Corporate loans reached Rp257,936 billion (Jun 2020), up 8.9% year-to-date from Rp236,875 billion at Dec 2019 and 17.7% year-over-year from Rp219,161 billion - decelerating from Q1's 9.9% quarter-to-date liquidity-drawdown pace as the segment eased back 0.9% quarter-over-quarter in Q2, consistent with large borrowers who'd drawn down credit lines for a cash buffer beginning to normalize that behavior once the initial shock passed. Corporate remained the only one of the three segments still growing for the half.

Commercial & SME

Commercial & SME loans fell further to Rp184,599 billion (Jun 2020), down 9.0% year-to-date from Rp202,888 billion at Dec 2019 and down 0.9% year-over-year from Rp186,340 billion - a second straight quarter of contraction (-3.4% QoQ in Q2, on top of Q1's own 5.8% QoQ drop), meaning this segment has now shrunk in both quarters of Indonesia's Covid-19 half.

Consumer

Consumer loans fell to Rp146,887 billion (Jun 2020), down 7.2% year-to-date and 5.1% year-over-year. Mortgages held up best (+0.3% YoY, though -2.8% YTD), while vehicle loans (-11.9% YoY) and credit-card balances (-18.6% YoY, -24.6% YTD) kept contracting harder, extending Q1's pattern of discretionary consumer credit pulling back the most - BCA's own new-booking-versus-runoff charts show vehicle-loan runoff outpacing new bookings every quarter since March 2020.

Segment Comparison

Segment	Jun 2020 (Rp bn)	Dec 2019 (Rp bn)	YTD	Jun 2019 (Rp bn)	YoY	Share (Jun 2020)
Corporate	257,936	236,875	✅ +8.9%	219,161	✅ +17.7%	43.3%
Commercial & SME	184,599	202,888	⚠️ -9.0%	186,340	⚠️ -0.9%	31.0%
Consumer	146,887	158,335	⚠️ -7.2%	154,813	⚠️ -5.1%	24.7%
Total (three segments, consolidated)	589,422	598,098	⚠️ -1.5%	560,314	✅ +5.2%	99.0%

Corporate is now doing double duty for BCA's loan book - the only segment still growing at all, while both Commercial & SME and Consumer keep shrinking. That's a narrower growth base than a bank normally wants to lean on, but it's also consistent with BCA's own disclosed restructuring split: of the Rp116 trillion pipeline management described as of mid-July, Rp83.7 trillion (72%) sits in business loans (Corporate plus Commercial & SME sectors directly and indirectly hit) against Rp32.3 trillion (28%) in consumer loans - meaning the segment carrying the loan book's growth is also the one carrying most of the restructuring load, a tension this series will need to watch resolve over the next two quarters.

Beyond the Usual

This is an unaudited interim OJK-format filing - a balance sheet, income statement, commitments/contingencies schedule, cash-flow statement, and a detailed asset-quality-by-collectability schedule, but no narrative notes to the financial statements. The findings below come from that asset-quality schedule, BCA's own restructuring-pipeline disclosure, and the filed P&L's own line-item detail, not from footnotes this filing format doesn't carry.

The Restructured Book Grew 671% in a Quarter - and 89% of It Still Reads "Current"

BCA's outstanding restructured loans (bank-only) jumped to Rp69.3 trillion at 30 June 2020 from Rp9.0 trillion at March 2020 - a 671.4% quarter-to-date increase, driven almost entirely by a new "Current"-classified Covid-19 restructuring bucket that didn't exist at Mar 2020 and reached Rp59.0 trillion by Jun 2020. Of the full Rp69.3 trillion restructured book, Rp61.4 trillion (88.6%) is classified "Current," with only Rp3.0 trillion in NPL and Rp4.9 trillion in Special Mention. This isn't BCA disguising anything - Indonesia's OJK explicitly permits Covid-19-restructured loans to retain their pre-restructuring collectability classification as a regulatory relief measure, and BCA discloses the split plainly in its own presentation. But it does mean the reported 2.1% gross NPL ratio and even the 5.3% "Loan at Risk" figure both undercount the loan book's actual credit exposure - BCA's own broader measure, Loan at Risk including Covid-19 restructured loans, stood at 15.5% of total loans at Jun 2020, up from a negligible gap at Mar 2020 (4.7% either way, since the Covid-restructuring bucket barely existed yet). A reader relying on the headline NPL ratio alone would miss that roughly one in seven Rupiah of BCA's loan book is now touched by Covid-era forbearance in some form.

Loan-Loss Coverage Eased Right as the Restructuring Wave It Was Built For Actually Arrived

Provision/NPL coverage (bank-only) fell to 204.5% at Jun 2020 from Mar 2020's 229.8% - still up from Jun 2019's 183.7%, but a reversal of the front-loading trend that quarter's post specifically praised as "pricing the risk it can already see coming." The timing is notable: coverage peaked the quarter before the restructuring pipeline actually materialized at scale, then eased in the very quarter Rp69.3 trillion of loans entered restructuring. Provision/LAR (a broader coverage measure against the Loan-at-Risk pool, not just NPL) did rise modestly, to 79.9% from Mar 2020's 78.8% - so coverage against the wider at-risk pool held roughly steady even as the NPL-based ratio eased. Whether Q3's provisioning resumes building against the now-much-larger restructured base, or holds at this level, is the single most important thing to check in the next quarter's numbers.

BCA's Own Sector Data Shows It's Slightly More Exposed Than the Industry to the Hardest-Hit Sector

BCA's business-loan book carries roughly 23% of its exposure in Trading, Restaurant & Hotel - the single largest sector by composition, and the one most directly exposed to Indonesia's social-distancing measures. BCA's own presentation shows this sector's NPL rate at 4.1% (Jun 2020, bank-only, per LBU regulatory reporting) against an industry-wide rate of 3.7% (Apr 2020, per the same reporting basis) - a modest gap, and not evidence of mismanagement given the sector's outsized share of BCA's book generally, but worth tracking given it's both the bank's single biggest sector concentration and running slightly worse than peers on delinquency.

Q1's Personnel-Expense Spike Was Confirmed as Seasonal, Not a New Cost Trend

Q1 2020's post flagged a 110.5% quarter-over-quarter jump in personnel expenses as likely the usual front-loaded annual salary increment Indonesian banks book in Q1, "a seasonal pattern worth remembering the next time a Q1-vs-Q4 personnel-cost comparison looks alarming on its own." Q2 confirms it: personnel expenses fell to Rp2,785 billion (consolidated, per BCA's own quarterly breakdown), down 50.5% from Q1's Rp5,624 billion - exactly the reversion the seasonal explanation predicted, and the main reason BOPO eased from Q1's 77.1% to 66.6% for the half.

The Rabobank Indonesia Acquisition Cleared Its Next Regulatory Step

The acquisition of PT Bank Rabobank Indonesia first disclosed in Q1 advanced this quarter: BCA's own presentation discloses that preliminary regulatory approval had been obtained, with shareholder approval scheduled via an Extraordinary General Meeting of Shareholders on 30 July 2020 - just after this quarter's close - and completion still expected in the second half of 2020. No consideration amount was disclosed.

A National Banking-Sector Comparison Shows BCA's NPL Ratio Rising Faster Than the Industry's

BCA's own presentation cites OJK sector-wide data showing the Indonesian banking industry's aggregate NPL ratio moved from 2.5% (Dec 2019) to 2.9% (Apr 2020, +40bp YTD) - a smaller move than BCA's own bank-only gross NPL ratio, which rose from 1.3% (Dec 2019, per FY2019's post) to 2.08% (Jun 2020, +78bp YTD). BCA's NPL ratio remains well below the industry's in absolute terms, but is deteriorating faster off a lower base - worth watching against whether that gap continues to close or BCA's asset quality proves structurally more resilient than the sector average once the restructuring wave works through.

Target Valuation Range

P/E of ~28.7x and P/B of ~4.15x - Bottom line: fairly priced for now, but the market is pricing in that the restructuring wave resolves cleanly - the same 20-30%-of-loans guidance that made Q1's post call valuation "too early to call" hasn't been walked back, it's just now backed by Rp116 trillion of actual restructured loans instead of a forecast.

BCA's shares (split-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) closed at approximately Rp28,475 on June 30, 2020, up 3.1% from Q1 2020's Rp27,625 close - a modest partial recovery of Q1's 17.3% single-quarter decline, not a reversal of it. Measured over the trailing two years, the shares are still well below their Dec 2019 peak of Rp33,425 (-14.8%), though comfortably above the pandemic low of roughly Rp25,850 (converted, per the same split basis) reached in April 2020 - a peak-to-trough move of about 22.6% that falls short of the "dedicated stock-price section" threshold this series applies, so it's folded in here alongside valuation rather than treated separately. BCA's own presentation also discloses a 4-year CAGR comparison (Jul 2016 - Jul 2020): BCA's own share price compounded at roughly 21% annually over that stretch against the JAKFIN financial-sector index's roughly 1% - a reminder that even a pandemic-hit half hasn't dented BCA's long-run outperformance of the sector it trades alongside.

• P/E^»: ~28.7x, annualizing H1 2020 EPS of Rp496 (×2 = Rp992) against the Rp28,475 June 30, 2020 close - up from Q1 2020's ~25.9x on an annualized-quarterly basis, and roughly matching H1 2019's own ~28.7x on a like-for-like half-year-annualized basis - meaning the market is paying almost exactly what it paid a year ago for a business now earning less.
• P/B^»: ~4.15x, using book value per share of Rp6,863 (equity attributable to owners, Rp169,170,382 million, divided by 24,655,010,000 shares outstanding) - up from Q1 2020's ~3.97x, though still below FY2019's ~4.74x.

Market cap → book value	Q2 2020
Share price (period-end)	Rp28,475
Shares outstanding	24,655,010,000
Market capitalization	Rp702,051B (~$49.26B)
Book value (equity attributable to owners)	Rp169,170B (~$11.87B)
P/B»	~4.15x

P/E and P/B	Q1 2020 (annualized)	Q2 2020 (H1 annualized)	Change
EPS (annualized)	Rp1,068	Rp992	⚠️ down
P/E»	~25.9x	~28.7x	⚠️ up
Book value per share	Rp6,961	Rp6,863	⚠️ down
P/B»	~3.97x	~4.15x	⚠️ up

As in every prior post in this series, a full DCF isn't attempted here - a bank whose restructured loan book grew sevenfold in a single quarter, with management's own guidance still pointing toward 20-30% of total loans by year-end, doesn't have earnings stable enough yet to anchor a discounted cash flow. The peer-multiple comparison this section would normally lean on isn't available either: no other IDX bank in this backlog has a post covering the same June 2020 quarter yet to compare against.

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