---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 205246
conversation_id: 24a54c8c-7d7c-4fea-82ae-e8eec1a4c910
citations: 12
created: 2026-05-31 22:05:31Z
---

# What are the key risks to Bank Central Asia’s growth trajectory?

# Key Risks to Bank Central Asia's (BBCA IJ) Growth Trajectory

BCA is CLSA-rated **O-PF** with a target price of **Rp12,100** (36% upside from Rp8,925), and described as "the most solid pick for the longer term" given an industry-leading **82-85% CASA ratio**, **21% sustainable ROE**, and unrivalled liquidity buffers (LCR 305.7%, NSFR 159.9%, LDR 74.1% in 1Q26) [11]. The franchise itself is not in question. The risks below are the variables that could compress the *trajectory* of earnings growth — narrowing the gap between BCA's premium multiple and its peers, or pulling consensus 25CL/26CL forecasts lower.

---

## 1. Competitive Erosion of the Transaction-Banking Premium

CLSA explicitly flags this as a **bank-specific structural risk**: BCA's outsized valuation premium rests on its first-mover position in domestic payments and settlement. As the top-three state banks (Mandiri, BRI, BNI) ramp up their digital and transactional offerings, **"there is a risk that the premium paid for such a franchise diminishes over time"** [1].

- BCA's CASA ratio (82% in 1Q25; 85.2% in 1Q26) is the industry benchmark, but Mandiri's "value chain" strategy and BRI's payroll/MBG-driven savings push are explicitly targeting this moat [5].
- BCA's cost of savings remains the lowest in the system, but **savings growth still outpaced current accounts and time deposits** for peers as well — peers are catching up [5].

## 2. NIM Compression — Already Materialising

NIM trajectory is the single most quantifiable risk. The Q1 2026 analyst pack shows compression has continued through the most recent reporting period:

| Metric (Bank Only) | 1Q-25 | 4Q-25 | 1Q-26 | YoY |
|---|---|---|---|---|
| NIM | 5.8% | 5.6% | **5.4%** | **-0.4ppt** |
| Risk-Adjusted NIM | 5.3% | 5.2% | **4.8%** | **-0.5ppt** |
| Cost of Credit | 0.5% | 0.4% | **0.6%** | +0.1ppt |
| LDR | 76.1% | 76.8% | 74.1% | -2.0ppt |

Source: BCA Analyst Meeting 1Q26 [11]

- BCA's reported 1Q25 NIM (5.8%) hit the upper end of guidance but had already fallen **20bps QoQ from 6% in 4Q24** [3]. CLSA's 25CL NIM forecast was kept stable but the **26CL NIM was cut from 5.66% to 5.60%** [2].
- The 1Q26 prints show NIM has fallen below the 25CL forecast of 5.8%, with risk-adjusted NIM down a full 50bps YoY [11].
- The driver is industry-wide: **banking sector NIM has compressed from 4.92% (2023) to 4.47% (Feb-26)** as **loan yield (-95bps YoY) is falling faster than cost of funds (-42bps YoY)** [9].

## 3. Loan-Growth Deceleration

BCA's loan growth has materially slowed: **gross loans rose only 5.6% YoY in 1Q26 (Rp994tn vs Rp941tn in 1Q25)**, sharply below the 12.6% YoY pace recorded in 1Q25 and well off the 14.5% growth booked in FY2024 [10].

- Sector loan growth eased from 13.7% (2025) to **9.0% YTD by Feb-26**, with industry LDR falling from 87.6% to 83.7% — a system-wide deleveraging signal [10].
- CLSA already **cut BCA's 25CL loan growth from 8.6% to 7.8% and 26CL from 12.8% to 11.8%** [2]. The latest 1Q26 print of +5.6% YoY puts even the revised trajectory at risk.
- Banking-industry LDR remained elevated at ~90% in April 2025 amid soft funding growth; CLSA notes **"loan growth is chugging along but likely to be at the lower end of guidance at YE for most banks"** [4].

## 4. Liquidity Tightening Across the System

Although BCA itself remains the most liquid Big-4 bank (LCR 300%+, NSFR 156%+), the surrounding system is the constraint:

- CLSA flagged that **"liquidity condition is still tight"** sector-wide, with industry LDR near 90% [4][7].
- A reduction in the official RRR (currently 9% with incentives) **"will be more impactful to the whole banking system" than the PLM cut already enacted** [7]. BCA's PLM position of 32.72% is already so high that further PLM-related easing **"benefits smaller banks that may have lower PLM buffers"** — BCA gets less marginal benefit from regulatory loosening [4].
- The growth ceiling is funding-driven: every 1% of TPF translates to only **1.3% of incremental loans for BCA** [7], so loan growth is constrained by funding mobilisation, not capital.

## 5. Macro & Currency Risk

- CLSA's risk section names **"policies changes that can have impact to outlook plus global uncertainty"** as the leading risk [1][3].
- BCA's own 1Q26 analyst pack documents that **"Rupiah weakened; FX reserve declined but still ample"** — FX reserves fell from US$155.7bn (Apr-25) to US$148.2bn (Apr-26), with net foreign equity outflows of **-Rp141.7tn YTD by April 2026** [12].
- An April-2025 sector note specifically modeled **"impact to key Indonesian banks from slowdown risk in commodity as well as weak IDR,"** noting banks have varying exposure in palm oil and coal financing — though direct US-export exposure is minimal (cannot cite SUMMARY chunk; flagged for reference: doc 607956080 "Commodity and currency risk").

## 6. Political, Legal & Governance Risk

CLSA explicitly lists [1][3]:

- **Indonesian political (stability and legal) risk** affecting both earnings generation and multiples paid for BCA shares.
- **Operating and credit risks** arising from day-to-day operations.
- **Concentrated ownership**: BCA is majority-owned and controlled by the **Djarum Group**, which "could make changes to management." The succession is already underway — incoming CEO **Hendra Lembong** (ex-deputy CEO) became effective 1 June 2025, replacing Jahja Setiaatmadja, who moved up to President Commissioner [2].

## 7. Asset-Quality Drift (Watch, Not Alarm)

Headline asset quality is improving (gross NPL 2.0% → 1.8% YoY in 1Q26 [11]), but underlying signals warrant monitoring:

- **Loan-at-risk (LAR) rose 70bps QoQ to 6% in 1Q25** due to a mineral-related syndicated debtor moving into short-term restructuring [3].
- **NPL coverage fell to 174.6% in 1Q26 from 180.1% a year ago** [11].
- Sector-wide nominal NPLs are rising (from 173 to 186, with NPL ratio creeping from 2.1% to 2.2%); higher NPL & SML drove **system LAR up to 9.2% in Feb-26 from 8.8% in 2025** [8].
- Textile-portfolio exposure is well-provisioned, but ex-textile NPLs at 1.2-1.3% indicate the headline 2.0% is being held up by a known weak pocket [3].
- CLSA's 25CL forecast embeds **provision-expense growth of +58.6% and NPL ratio rising to 2.0% from 1.8% in 2024** [6] — modest cost-of-credit normalisation is already in the base case, but acceleration would compress 26CL EPS growth (currently +7.9%).

---

## Synthesis — Where the Trajectory Could Bend

The "growth trajectory" base case (~5-8% net-profit growth 25-27CL, sustained ~21% ROE [6]) rests on three load-bearing assumptions:

1. **NIM stabilises around 5.6-5.8%** (1Q26 actuals are already at 5.4% — under pressure).
2. **Loan growth re-accelerates from current 5.6% YoY toward double digits** (industry deceleration and liquidity constraints push against this).
3. **The transactional/CASA premium holds** despite SOE-bank digital catch-up.

The **most immediate, quantifiable risks** are NIM compression and loan-growth deceleration — both already visible in 1Q26 prints. The **most structural risk** is competitive erosion of the payments/settlement franchise that justifies the 5.2x PB premium [2]. The **fat-tail risks** are governance/policy (Djarum-driven management change, Indonesian regulatory pivots) and IDR-led liquidity stress.

CLSA's view: BCA remains the safest Big-4 vehicle [4], but the upside-vs-peers narrative has narrowed — BCA "is now trading at historical mean PB" and Mandiri was upgraded ahead of BCA in the June-2025 sector update [4]. The risk-reward is no longer asymmetric to the upside.

---

**Sources**

[1] Indonesian banks (Hope floats on liquidity) — CLSA (17-Jun-2025) — 607962177LinqAlpha.PDF — Investment risks - BBCA IJ
[2] Bank Central Asia - O-PF (Good earnings despite tough macro) — CLSA (23-Apr-2025) — 607956688LinqAlpha.PDF — Key assumptions / forecast revisions
[3] Bank Central Asia - O-PF (Good earnings despite tough macro) — CLSA (23-Apr-2025) — 607956688LinqAlpha.PDF — Sustaining margin / CoC
[4] Indonesian banks (Hope floats on liquidity) — CLSA (17-Jun-2025) — 607962177LinqAlpha.PDF — Liquidity condition
[5] Indonesian banks (Hope floats on liquidity) — CLSA (17-Jun-2025) — 607962177LinqAlpha.PDF — Banks defending margin via different strategies
[6] Indonesian banks (Hope floats on liquidity) — CLSA (17-Jun-2025) — 607962177LinqAlpha.PDF — Sector executive summary
[7] Indonesian banks (Hope floats on liquidity) — CLSA (17-Jun-2025) — 607962177LinqAlpha.PDF — Loan-growth sensitivity / RRR table
[8] Bank Central Asia - O-PF (Good earnings despite tough macro) — CLSA (23-Apr-2025) — 607956688LinqAlpha.PDF — Asset-quality / capital adequacy forecasts
[9] BCA Analyst Meeting 1Q26 (slides) — Banking-industry NIM data
[10] BCA Analyst Meeting 1Q26 (slides) — Industry loan-growth / LDR table
[11] BCA Analyst Meeting 1Q26 (slides) — Key Ratios (Bank Only)
[12] BCA Analyst Meeting 1Q26 (slides) — FX reserves and Rupiah / net foreign outflow

## Citations

- [1] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [2] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [3] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [4] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [5] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [6] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [7] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [8] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [9] **PT Bank Central Asia Tbk, Q1 2026** · external
- [10] **PT Bank Central Asia Tbk, Q1 2026** · external
- [11] **PT Bank Central Asia Tbk, Q1 2026** · external
- [12] **PT Bank Central Asia Tbk, Q1 2026** · external

