Higher margins, lower opex buoy Bank Central Asia’s profit growth in Q2

Net profit for the first six months of the year is $1.65b, 11% higher than in H1 2023.

Bank Central Asia’s (BCA) net profit grew 10.7% year-on-year (YoY) to almost IDR13.98t ($858.04b) in Q2, driven by interest margin expansion and lower costs.

BCA’s net interest margin (NIM) expanded to 5.8% in Q2. This was thanks to “changes in asset composition and more efficient funding usage,” said Posmarito Pakpahan, analyst, UOB Kay Hian (UOBKH).

Net profit for the first six months of 2024 is IDR26.88t ($1.65b) an 11% increase compared to H1 2023. This is in line with UOBKH expectations, accounting for over half of its 2024 full-year estimates.

BCA also saw an 8.4% decline in operating expenses (opex) and a 20 basis point (bp) decrease in credit cost in Q2, Pakpahan said.

Loans rose 15.5% YoY in Q2, on the back of corporate loan (19.9%), consumer loan (13.6%), and small and medium enterprise (SME) loan segments (12.76%) growing. 

Opex fell 8.4% compared to Q1, with manpower expenses dropping 17%, UOBKH. 

With opex growing at a lower rate than loans, cost-to-income ratio is 30.7% in the first six months of 2024.

Loans at risk (LaR) ratio declined to 6.3% in June, compared to 8.7% in January 2023 and 6.6% in December 2023. 

Non-performing loans ratio was at a “manageable” 2.2% as of June, according to UOBKH. This is slightly higher than the 1.9% in end-March, however.

(US$1 = IDR16,291.55; as of 31 July 2024, 11:45AM)