BBCA Why Did Profit Growth Outrun Its Own Operating Income?

A Profit Recovery That Isn't Coming From Where It Looks

Q1 2023's post closed with two loose threads: the four-straight-quarter sequential profit growth streak had just broken (Q1 fell 2.1% QoQ), and the restructured loan book's worst collectability tier had reversed Q4's improvement, growing 7.5% quarter-over-quarter again. Q2 2023 resolves the first thread and extends the second. Standalone net profit rose 9.8% quarter-over-quarter to Rp12,660 billion, restarting the growth the QoQ chain had briefly interrupted, and H1 2023's cumulative net profit reached Rp24,190 billion, up 34.0% year-over-year. On the surface, this reads as the streak simply resuming.

It isn't quite that clean. Pre-provision operating profit (PPOP^») - the profit line before loan-loss provisioning, the part of the business that best isolates whether BCA is actually earning more from lending and fees - fell 9.4% quarter-over-quarter, from Rp15,680 billion in Q1 to Rp14,203 billion in Q2. Net interest income was essentially flat QoQ (+0.1%) and non-interest income actually dropped 5.3%. What turned a shrinking PPOP into a growing net profit was provisioning: bank-only cost of credit^» collapsed from 0.8% in Q1 to just 0.1% in Q2, per BCA's own presentation - the lightest quarterly provisioning charge this series has recorded. That's a real, legitimate driver (see Key Financial Metrics for the mechanics), but it's a different story than "the bank grew faster this quarter" - it's "the bank set aside less against losses this quarter," and those two sentences shouldn't be read as interchangeable even though they land on the same headline profit number.

Meanwhile, the two threads Q1 left open both continued in the same direction: the restructured book's NPL tier grew a fourth straight quarter (see Beyond the Usual), and Corporate lending - which stalled in Q1 - resumed growing (see Segment Performance).

The Prescription

BCA should keep pushing the CASA^»-funded margin advantage and the low cost-of-credit environment while both remain available, but it should stop letting a quarter's provisioning line do the heavy lifting that operating income isn't doing on its own. Cost of credit at 0.1% is not a sustainable steady state for a loan book where the restructured NPL tier is growing every quarter (see Beyond the Usual) - it's a release of caution built up in earlier, more conservative periods, and a bank that keeps drawing it down to flatter net profit while PPOP itself softens is borrowing profit growth from a future quarter that will eventually need to provision again. The digital-channel and CASA engine remains the right long-term lever; the near-zero provisioning charge is not something to lean on as if it were.

What BCA should stop doing: presenting net profit growth without net-of-provisioning context when PPOP itself is moving the other way. This is the same distinction Q1's post drew between a strong YoY number and a weaker QoQ trend - this quarter adds a version of it one layer down: a strong net-profit number sitting on top of a weakening PPOP trend. A reader relying only on the headline net profit figure has no way to see that the operating business actually contracted quarter-over-quarter.

Key Financial Metrics

H1 2023 vs. H1 2022 (P&L, consolidated unaudited interim figures), and 30 June 2023 vs. 31 December 2022 (balance sheet, consolidated)

FX: IDR 14,992.5 = USD 1 (30 June 2023, per BCA's own filed financial statements' Reuters middle-rate disclosure) - a further 0.2% Rupiah appreciation from Q1 2023's Rp14,994.5, essentially flat this half.

This quarter's downloaded interim financial statements carry the same depth of notes Q1's post found - related-party transactions, off-balance-sheet commitment quality by credit stage, the collectability-tier restructured-loan schedule, and the product-based operating-segment note. See Beyond the Usual for what those notes show this quarter.

Metric	H1 2023 (IDR)	H1 2023 (USD)	H1 2022 (IDR)	YoY
Net Interest Income (+ sharia)	Rp36,982,770M	~$2,467.3M	Rp29,667,452M	✅ +24.7%
Non-interest income (gross)	Rp12,557,776M	~$837.7M	Rp11,534,206M	✅ +8.9%
Net Revenue (Operating Income, NII + non-interest)	Rp49,540,546M	~$3,305.0M	Rp41,201,658M	✅ +20.2%
Operating Income (PPOP, consolidated)	Rp29,882,839M	~$1,993.3M	Rp22,298,433M	✅ +34.0%
Net Income (attributable to owners)	Rp24,190,206M	~$1,613.9M	Rp18,049,471M	✅ +34.0%
EPS (H1, consolidated)	Rp196	~$0.0131	Rp146	✅ +34.2%

The YoY comparison looks broad-based - NII up 24.7%, non-interest income up 8.9%, PPOP up 34.0%, net income up 34.0% in lockstep with PPOP. That lockstep is itself informative: unlike Q1, where net income (+43.0% YoY) outran PPOP (+22.8% YoY) because provisioning fell YoY, this half's net income and PPOP grew at exactly the same YoY rate, meaning H1's provisioning expense as a share of PPOP was roughly flat versus H1 2022. The real divergence this quarter is standalone Q2 versus Q1, not YoY (see above): PPOP fell from Rp15,680bn to Rp14,203bn (-9.4% QoQ) while net profit rose from Rp11,530bn to Rp12,660bn (+9.8% QoQ). Non-interest income's 5.3% QoQ dip is worth a specific look - BCA's presentation breaks it into fees & commissions (essentially flat, +2.5% QoQ), trading income (-14.0% QoQ), and a residual "Others" line that fell 34.3% QoQ, together explaining the whole non-interest decline. Operating expenses also fell 8.8% QoQ, driven almost entirely by manpower expense dropping 23.8% QoQ (Rp4,680bn to Rp3,564bn) even as general & administrative costs rose 6.8% - consistent with a seasonal pattern where BCA's March AGM concentrates tantiem (bonus) accruals for the outgoing directors/commissioners into Q1, a cost that doesn't recur in Q2.

Balance sheet metric	Jun 2023 (IDR)	Jun 2023 (USD)	Dec 2022 (IDR)	YtD
Total Assets	Rp1,356,757,402M	~$90.49B	Rp1,314,731,674M	✅ +3.2%
Third Party Funds (deposits)*	~Rp1,071,000,000M	~$71.44B	Rp1,039,718,018M	✅ +3.0%
CASA»*	~Rp865,000,000M	~$57.71B	Rp847,938,000M	✅ +2.0%
Total Loans (outstanding)*	Rp735,939,000M	~$49.09B	Rp711,262,000M	✅ +3.5%
Total Equity (attributable to owners)	Rp224,598,612M	~$14.98B	Rp221,018,606M	✅ +1.6%

*Third Party Funds, CASA, and Total Loans (outstanding, consolidated including sharia financing) per BCA's own investor presentation, the same sourcing convention used since Sep 2019's post; Third Party Funds and CASA are presented rounded to the nearest trillion Rupiah as BCA's own presentation discloses them, rather than to the million as the filed financial statements disclose deposits.

Total equity (attributable to owners) recovered 6.3% quarter-over-quarter from Q1's Rp211,261,029M, reversing Q1's dividend-driven 4.4% QoQ drop - the Rp20,956,758M final FY2022 dividend tranche that had already been booked as a liability at Q1 was actually paid out in cash this quarter (14 April 2023, confirmed in this quarter's cash flow statement), but since that liability reduction had already hit equity in Q1, this quarter's equity gain is simply Q2's own retained net profit flowing through, undoing most of Q1's dip. Operating cash flow for the half was Rp49,513,360M (~$3,302.4M), down from H1 2022's Rp74,094,395M mostly on a much smaller net inflow from maturing investment securities this year. Cash and cash equivalents closed the half at Rp156,986,231M (~$10.47B), down 2.1% from Dec 2022's Rp160,422,371M, as the dividend payment and investing outflows outpaced operating cash generation.

Key Operational Metrics

Bank-only unless noted, from BCA's own filed financial-ratio disclosures and investor presentation:

• CASA ratio: 80.7% (Jun 2023, consolidated, per BCA's own investor presentation) vs Mar 2023's 81.2% ⚠️ - a second straight quarterly dip, down from FY2022's record 81.6%, though still comfortably the majority of funding.
• LFR^» (BCA's own term for LDR): 65.7% (Jun 2023) vs 65.6% (Mar 2023) ⚠️ - essentially flat, a fourth straight quarter near 65-66%.
• NIM^»: 5.5% (Jun 2023, quarterly, bank-only) vs Mar 2023's 5.6% ⚠️ - a third straight quarterly narrowing since Dec 2022's 5.9% record, though still well above H1 2022's 5.0%.
• ROA^»: 3.9% (Jun 2023, quarterly) vs 3.4% (Mar 2023) ✅ - a sizeable rebound, driven by the QoQ net-profit gain described above.
• ROE^»: 26.1% (Jun 2023, quarterly) vs 22.3% (Mar 2023) ✅ +3.8pp - the highest quarterly ROE this series has recorded.
• CAR^» (bank-only): 29.5% (Jun 2023) vs Mar 2023's 28.9% ✅ +0.6pp - a further small gain on top of Q1's regulatory-formula-driven jump, this time from retained capital rather than a new rule change.
• NPL ratio - gross (bank-only, point-in-time): 1.9% (30 Jun 2023) vs 1.8% (31 Mar 2023) ⚠️ - a small uptick, continuing Q1's own small uptick.
• NPL Coverage (Provision/NPL, bank-only): 257.1% (Jun 2023) vs Mar 2023's 285.4% ⚠️ -28.3pp - the sharpest quarterly drop in this ratio this series has tracked, a direct consequence of cost of credit falling to near zero while nominal NPL kept growing (see Beyond the Usual).
• Cost-to-Income Ratio^»: 31.2% (Jun 2023, quarterly) vs 35.1% (Mar 2023) ✅ -3.9pp - improved mostly on the manpower-expense seasonality described above, not a structural efficiency gain.
• Cost of credit (bank-only): 0.1% (Q2 2023) vs 0.8% (Q1 2023) ✅ -0.7pp - the lightest quarterly provisioning charge this series has recorded, the direct driver of this quarter's QoQ net-profit growth.
• Loan at Risk^» (ex-Covid, share of total loans): 8.7% (Jun 2023) vs Mar 2023's 9.5% ✅ - a fresh low for this series, continuing the multi-quarter improvement.
• LAR Coverage with Restructured Covid & off-B/S: 61.6% (Jun 2023) vs Mar 2023's 57.9% ✅, continuing the climb.

The coverage-ratio gap this series has tracked since 2021 - Provision/NPL coverage minus LAR-including-Covid coverage - narrowed sharply to 195.5 percentage points (257.1% minus 61.6%), down from Mar 2023's 227.5pp - but this narrowing is mechanically different from prior quarters' narrowing. In earlier quarters the gap closed because LAR coverage rebuilt faster than Provision/NPL coverage held steady or improved; this quarter it closed because Provision/NPL coverage itself fell 28.3 percentage points while LAR coverage improved only 3.7pp - a coverage-ratio compression, not a coverage-ratio convergence toward strength. Worth reading alongside Beyond the Usual's restructured-book finding: the specific NPL tier inside the restructured book kept growing for a fourth straight quarter even as headline NPL coverage eased.

Segment Performance

BCA reports three lending segments (consolidated, per this quarter's investor presentation): Corporate, Commercial & SME, and Consumer. Q1's post closed with Corporate's loan book essentially flat (-0.5% QoQ) after Q4 2022's rebound - that stall reversed this quarter.

Corporate

Corporate loans stood at Rp326,020 billion (Jun 2023), up 5.1% year-over-year and 1.7% quarter-over-quarter - resuming growth after Q1's marginal contraction, though at a markedly slower YoY pace than Q1's own 11.7% YoY reading, since Q1 2022's own base already reflected the segment's recovery underway by then. Its share of the total book held roughly steady at 44.3%.

Commercial & SME

Commercial & SME loans reached Rp219,182 billion (Jun 2023), up 10.9% year-over-year and 3.7% quarter-over-quarter - the fastest QoQ pace of the three segments this quarter, extending Q1's own steady growth into a sixth straight quarter.

Consumer

Consumer loans reached Rp183,864 billion (Jun 2023), up 13.9% year-over-year and 4.8% quarter-over-quarter - again the fastest-growing segment on a YoY basis, continuing the pattern this series has shown since 2022. Within Consumer, mortgages grew to Rp114,578 billion (+3.8% QoQ, +12.0% YoY) and vehicle lending to Rp51,430 billion (+7.4% QoQ, +19.2% YoY) - vehicle lending's YoY growth accelerated further past Q1's already-record 15.2% YoY reading.

Segment Comparison

Segment	Jun 2023 (Rp bn)	Jun 2022 (Rp bn, own contemporaneous figure)	YoY	Mar 2023 (Rp bn)	QoQ	Share (Jun 2023)
Corporate	326,020	310,232	✅ +5.1%	320,468	✅ +1.7%	44.3%
Commercial & SME	219,182	197,549	✅ +10.9%	211,127	✅ +3.7%	29.8%
Consumer	183,864	160,508	✅ +14.6%*	174,503	✅ +4.8%	25.0%
Total (three segments, consolidated)	729,066	668,289	✅ +9.1%	706,098	✅ +3.2%	99.1%*

*Consumer's own contemporaneous Jun 2022 figure implies +14.6% YoY growth, not the +13.9% BCA's own Jun 2023 presentation states for this segment - see Beyond the Usual for this discrepancy. Remaining ~0.9% of total loans is sharia financing (Rp7,882bn), reported separately from the three core lending segments.

All three segments grew simultaneously both YoY and QoQ this quarter, the first time since Q3 2021 that all three have done so with Corporate also accelerating out of a prior-quarter stall rather than merely holding flat. Total loan growth of 3.1% QoQ (per Key Financial Metrics) is now broad-based rather than concentrated in Consumer alone, as it was through much of Q1's slowdown.

Because this quarter's YoY comparative is Jun 2022, not a restated December figure, the segment reconciliation gap Q2-Q4 2022's posts tracked and Q1 2023 found absent simply isn't testable this quarter - that test only applies when a presentation restates a December comparative, which next happens when a post covering Q4 2023 restates Dec 2022.

Beyond the Usual

This quarter's downloaded interim financial statements carry the same depth of notes as Q1's - related-party transactions, off-balance-sheet commitment quality by credit stage, the restructured-loan collectability schedule, and the product-based operating-segment note. The findings below come from those notes.

The Restructured Book's Worst Tier Grew a Fourth Straight Quarter

BCA's Covid-19 restructured loan book (bank-only) kept shrinking in aggregate - down to Rp49.9 trillion at Jun 2023 from Mar 2023's Rp57.4 trillion, a 13.1% quarterly decline continuing the multi-quarter contraction this series has tracked. But the collectability breakdown inside that book shows the NPL tier grew a further 7.6% quarter-over-quarter to roughly Rp10.9 trillion, extending Q1's 7.5% QoQ growth into a fourth consecutive quarter of growth in this specific tier, even as the book around it keeps shrinking. The Current tier fell sharply (down 27.4% QoQ to Rp29.1tn) and Special Mention grew (up 37.2% QoQ to Rp9.8tn) - the same pattern Q1 showed, where the aggregate total looks like continued improvement while the worst tier specifically keeps deteriorating. This is now a four-quarter run (Q4 2022's decline was the only interruption), and the absolute level - Rp10.9tn - is the highest this series has recorded for this specific metric.

NPL Coverage Fell Sharply While the Restructured NPL Tier Kept Growing

Bank-only NPL Coverage (Provision/NPL) fell from 285.4% at Mar 2023 to 257.1% at Jun 2023, a 28.3-percentage-point quarterly drop - the largest single-quarter move in this ratio this series has recorded. This isn't a standalone data quirk: it's the mechanical result of cost of credit collapsing to 0.1% this quarter (see Key Operational Metrics) while nominal NPL (bank-only) grew 10.5% quarter-over-quarter. A bank can let coverage drift down for good reasons - genuinely lower expected losses, an already-ample cushion built in prior quarters - but this move lands in the same quarter the restructured book's own worst tier extended its fourth straight quarter of growth (see the finding above), which is the kind of juxtaposition that's easy to miss when the two numbers sit in different tables of the same presentation.

The Grand Indonesia Lease's Right-of-Use Asset Reversed Q1's Unexplained Growth

BCA's related-party office lease with PT Grand Indonesia, running to 30 September 2035, showed its right-of-use asset falling back to Rp227,049 million at Jun 2023 from Q1's Rp235,354 million - now slightly below even Dec 2022's Rp227,939 million, consistent with ordinary amortisation resuming after Q1's unexplained uptick. The finance lease obligation similarly eased to Rp63,692 million from Q1's Rp69,167 million, though it remains above Dec 2022's Rp58,593 million. Whatever drove Q1's brief reversal - a remeasurement, an FX effect on the lease's original USD-denominated terms, or something else the note never specified - didn't persist into Q2, and the lease is back to behaving like an amortising asset rather than a growing one.

Undrawn Credit Capacity to Customers Rebuilt Most of Q1's Sharp Drop

Unused (uncommitted) credit facilities extended to customers rose to Rp82,732,569 million at Jun 2023 from Q1's Rp68,631,119 million - a 20.5% quarterly increase that reverses most, though not all, of Q1's 24.7% quarterly decline; the figure is still 9.3% below Dec 2022's Rp91,165,108 million. As with Q1's move, this isn't concerning on its own - undrawn facility headroom naturally moves with new facilities being extended, drawn down, or expiring - but the round-trip across two quarters (a sharp Q1 drop, most of it recovered in Q2) is a reminder that a single quarter's move in this footnote-only figure isn't yet a trend.

Off-Balance-Sheet Commitment Provisioning for Stage 2 Exposure Kept Climbing, at a Slower Pace

BCA's provision against estimated losses from off-balance-sheet commitments and contingencies (unused facilities, letters of credit, bank guarantees) shows Stage 2 - the "significant increase in credit risk" bucket - growing to Rp169,938 million at Jun 2023 from Rp144,230 million at the start of the year, a 17.8% half-year increase. That's a much slower pace than the roughly 15-fold jump Q4 2022's post first flagged (Rp9.7 million to Rp144.2 million across FY2022), but it's still growing in the same direction - worth continuing to watch as a small, footnote-only indicator of where BCA's own credit-risk models see deterioration building before it shows up in on-balance-sheet NPL figures.

Consumer's Disclosed YoY Growth Rate Doesn't Match Its Own Year-Ago Figure

BCA's presentation states Consumer loans grew 13.9% year-over-year this quarter. Consumer's own contemporaneously-reported Jun 2022 figure - Rp160,508 billion, from that quarter's own post - implies a larger 14.6% YoY growth rate against this quarter's Rp183,864 billion. Corporate and Commercial & SME both reconcile cleanly (their disclosed YoY rates match what their own year-ago figures imply, to within a rounding point). This is a smaller-magnitude version of the Commercial & SME/Consumer swap Q2 2022's post first found - a discrepancy specifically in how Consumer's growth gets stated, not a data error large enough to suggest a fresh reclassification, but a reminder that this segment pairing has a real, recurring history of not tying out cleanly to its own prior disclosures.

No New Dividend Was Declared or Paid This Half Beyond the Already-Booked FY2022 Tranche

The Rp20,956,758 million final FY2022 dividend tranche - already recorded as a liability at Q1's close per that quarter's post - was actually paid in cash on 14 April 2023, confirmed directly in this quarter's cash flow statement. BCA's March 2023 AGM also authorized the Board, subject to the Bank's financial condition, to pay an interim dividend for fiscal year 2023 - but as of 30 June 2023, no such interim dividend had been declared or paid. This is a plain administrative confirmation rather than a new finding, included here because it's the mechanical explanation behind this quarter's equity rebound (see Key Financial Metrics).

Coverage Table

Metric	Q2 2023	Q1 2023	QoQ	Why it matters
Net profit (standalone)	Rp12,660bn	Rp11,530bn	✅ +9.8%	Resumes the sequential growth streak Q1 broke
PPOP (standalone)	Rp14,203bn	Rp15,680bn	⚠️ -9.4%	This quarter's profit gain came from lighter provisioning, not stronger operating income
Cost of credit (bank-only)	0.1%	0.8%	✅ -0.7pp	The lightest quarterly provisioning charge this series has recorded
NPL Coverage (bank-only)	257.1%	285.4%	⚠️ -28.3pp	Sharpest single-quarter coverage drop this series has tracked
Restructured loan NPL tier (bank-only, QoQ)	+7.6%	+7.5%	⚠️ Fourth straight rise	The specific tier that keeps deteriorating inside an otherwise-shrinking book
Corporate loans (consolidated, QoQ)	+1.7%	-0.5%	✅ Reversed	All three lending segments grew simultaneously for the first time since Q3 2021

Target Valuation Range

P/E of ~24.1x (TTM) and P/B of ~5.02x - BCA's shares are fairly valued here, trading at a slightly lower trailing multiple than Q1 2023's close on a like-for-like annualized-quarter basis, because the trailing-year earnings run rate grew faster than the share price did - but the multiple doesn't yet reflect this quarter's own tension between a strong headline profit number and a fourth straight quarter of provisioning-cushion erosion.

BCA's shares closed at Rp9,150 on June 27, 2023 (the last trading day of the quarter), up 4.6% from Mar 2023's Rp8,750 close and up 26.2% year-over-year from Jun 2022's Rp7,250. Over the trailing two years, shares are up 51.9% from Jun 2021's Rp6,025 close - a window that still includes the same Jul 2021 trough of Rp5,970 and Nov 2022 peak of Rp9,300 Q1's post tracked, a peak-to-trough swing of roughly 55.8%, wide enough to keep this as a dedicated section for a fourth straight quarter. BCA's last stock split (1:5) took effect 13 October 2021, before this two-year window begins, so no further split adjustment applies to these prices.

• P/E^»: ~24.1x, using the trailing four quarters' net profit (Rp10,905bn + Rp11,781bn + Rp11,530bn + Rp12,660bn = Rp46,876bn, Q3 2022 through Q2 2023) against the Rp9,150 close and 123,275,050,000 shares outstanding - up slightly from Q1's ~23.3x on an annualized-single-quarter basis, though the two aren't directly comparable methods; using Q1's own annualize-one-quarter method on Q2 alone (Rp102.7 EPS × 4 = Rp410.9) gives ~22.3x, which is the more like-for-like comparison and shows a slightly cheaper multiple than Q1, since the share price's 4.6% QoQ gain was outpaced by Q2's 9.8% QoQ profit growth.
• P/B^»: ~5.02x, using book value per share of Rp1,822 (total equity attributable to owners, Rp224,598,612 million, divided by 123,275,050,000 shares) - down from Q1's ~5.11x, as this quarter's equity rebound (see Key Financial Metrics) grew book value per share faster than the 4.6% share-price gain.

Market cap → book value	Q2 2023
Share price (period-end)	Rp9,150
Shares outstanding	123,275,050,000
Market capitalization	Rp1,127,967B (~$75.23B)
Book value (equity attributable to owners)	Rp224,599B (~$14.98B)
P/B»	~5.02x

P/E and P/B (like-for-like, annualized single-quarter basis)	Q1 2023	Q2 2023	Change
EPS (annualized)	Rp376	Rp410.9	✅ up
P/E»	~23.3x	~22.3x	✅ down
Book value per share	Rp1,714	Rp1,822	✅ up
P/B»	~5.11x	~5.02x	✅ down

TTM P/E, using the trailing four quarters' actual net profit rather than an annualized single quarter, comes to ~24.1x - the two methods diverge because Q3-Q4 2022 profit growth outpaced Q1-Q2 2023's, so the TTM figure carries more weight from the stronger year-ago base.

A full DCF still isn't attempted here, for the same reason as every prior post in this series: this quarter's central tension - strong headline profit growth sitting on top of a shrinking PPOP and a fourth straight quarter of restructured-book deterioration - is exactly the kind of input a DCF would need to resolve with real conviction about which trend is durable, and that conviction doesn't exist yet from two data points. The peer-multiple comparison this section would normally lean on also isn't available yet - no other IDX bank in this backlog has a post covering the same June 2023 quarter to compare against.

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