---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 308819
conversation_id: c5dccabc-956c-4a98-a048-f490ed0d18b3
citations: 17
created: 2026-05-31 22:06:34Z
---

# What is the investment thesis for Bank Central Asia in the current market environment?

# Bank Central Asia (BBCA IJ) — Investment Thesis in the Current Market Environment

**Setup**: Subject = PT Bank Central Asia (BBCA IJ; market cap ~US$68bn). Internal coverage is from **CLSA's Indonesia banks team (analyst: Sarina Lesmina, CFA)**, latest dated **17-Jun-2025**. The most recent corporate data point is **BCA's 1Q26 Analyst Presentation (23-Apr-2026)**. Today is 31-May-2026 — the CLSA archive runs ~11 months behind, so the *quantitative* thesis (TP, multiples, FY guide) is anchored to mid-2025, while the *macro reality check* uses BCA's own 1Q26 deck and Apr-May 2026 tape.

---

## 1. The Core Bull Case (CLSA Latest Stance)

**Rating: O-PF (Outperform). Target Price: Rp12,100. Upside at time of report: ~36% from Rp8,925** [3]. Within the Indonesian Big-4, BCA is CLSA's **"safest and most solid pick for the longer term"** — even after upgrading Mandiri to High-Conviction O-PF, BCA retains the structural top spot [12].

The four pillars of the thesis (verbatim CLSA framing) [1][2]:

| Pillar | Substance |
|---|---|
| **Franchise dominance** | "Strong franchise in wholesale and consumer banking… price leader… super prudent bank that results in a very stable profit growth versus other banks" [1][2] |
| **Profitability moat** | "Sustainable 21% ROE over decades" — 1Q25 ROE actually printed at **26.2%** [1][9] |
| **Digital leadership** | "Leader in innovation (notably on the digital side)" [1][2] |
| **Capital strength** | Tier 1 CAR 26.6% (1Q25); "strong capital to support future loan growth" [1][9] |

**Catalyst path**: Defending the transactional franchise and continuing to gain market share amid stable macro conditions [1].

---

## 2. Why BCA Stands Out — The Liquidity Differentiation (Most Important Theme Now)

The dominant 2025–26 narrative for Indonesian banks is **liquidity scarcity**, and this is where BCA's structural premium gets reinforced rather than eroded:

- **Industry LDR sits at ~90%** (Apr-2025); SOE banks raised LDR despite lowering targets [5]. **BCA's LDR was 76.1% (1Q25)** — moving *up by design*, not by force [5].
- **BCA is "the most liquid big bank from all metrics: LDR, LCR and NSFR"**, with **LCR of 300% and NSFR of 156%** — both well above peers and the 100% threshold [6].
- **CASA ratio of 82.1%** in 1Q25 with savings = 60% of CASA. "BCA is the benchmark" for the sector with the lowest cost of savings vs. peers [7].

In a "higher-for-longer" rate environment where competitors are stuck chasing deposits, BCA's franchise effectively earns optionality.

---

## 3. The Numbers — 1Q25 Print (Last Quarter in CLSA's Archive)

| Metric | 1Q24 | 4Q24 | 1Q25 | YoY | Source |
|---|---|---|---|---|---|
| Net Profit (Rpbn) | 12,879 | 13,700 | **14,100** | +9.5% | [9] |
| NIM | 5.60% | 6.00% | **5.80%** | +20bps | [9] |
| CIR | 35.7% | 38.3% | **34.4%** | -125bps | [9] |
| NPL gross | 1.90% | 1.80% | **2.00%** | +10bps | [9] |
| LDR | 71.2% | 78.4% | **76.1%** | +490bps | [9] |
| CAR | 26.3% | 29.4% | **26.6%** | +30bps | [9] |
| ROE | 22.7% | 24.2% | **26.2%** | +350bps | [9] |
| Loan Growth YoY | — | — | **+12.6%** | — | [9] |

**1Q25 P&L quality**: 1Q25 NIM 5.8% landed in management's 5.7–5.8% guide range, driven by **CASA +6% QoQ / +8.3% YoY** which expanded CASA ratio. Front-loaded provisions (CoC 50bps in 1Q25 vs. 30bps FY guide) due to a single mineral-related syndicated loan moved to short-term restructuring; ex-textile NPLs are 1.2–1.3% [11].

---

## 4. CLSA Model Assumptions — Set Against 2025 Guidance

| 25CL Driver | CLSA Model | Mgmt Guidance (Unchanged) | Source |
|---|---|---|---|
| NIM | 5.80% | 5.7–5.8% | [10] |
| Loan growth | 7.8% (cut from 8.6%) | 6–8% | [10] |
| Cost of Credit | 30bps | 30bps | [10] |
| CIR | 34.4% | 33–34% | [10] |
| LAR | — | 5.2–5.5% (1Q25: 6.0%) | [10] |
| Net Profit 25CL | Rp57.6tn (+5.1% YoY) | — | [12] |
| Net Profit 26CL | Rp62.2tn (+7.9%) | — | [12] |

**Governance**: New CEO **Hendra Lembong** (ex-deputy CEO) effective **1 June 2025**, with ex-CEO Jahja Setiaatmadja transitioning to President Commissioner — a continuity-oriented succession that CLSA implicitly endorses by leaving the thesis intact [10].

---

## 5. Valuation Framework

CLSA's TP is built off a Gordon Growth Model with these inputs [2][4]:

- **Sustainable ROE: 21%**
- **Risk-free rate: 7.5%**
- **Market Risk Premium: 5.0%**
- **Beta: 0.84**
- **LT growth: 9.5%**
- **→ Implied 25CL PB: 5.2x**

At Apr-2025, BCA was trading at **3.5x PB 26CL — *below* its historical mean** [4]. The premium versus Indonesian peers is justified by "prudent risk management and a strong transaction franchise" [2].

---

## 6. Current Market Environment Stress Test (1Q26 + Tape) — Where Reality Pushes Back

Two pieces of post-CLSA-archive data materially recalibrate the setup:

### a) Macro tailwind/headwind mix from BCA's own 1Q26 deck (23-Apr-2026)

- **BCA Business Transaction Index at 165** for May'25–Apr'26 vs. 105 prior-year window — "business transaction shows strong growth" [13]
- **Consumer Spending Index at 135** vs. 87 in prior window — improvement since 4Q25 [13]
- **System loan growth has decelerated to +9.0% YoY (Feb-26)** from peaks above 13%, with **LDR contracting 60bps YTD to 83.7%** — "loan growth continued to ease" [15]
- **Net foreign equity outflows hit -Rp141.7tn (Apr '26)** vs. -Rp57.2tn in Apr '25 — equity selling pressure has more than doubled [14]
- **FX reserves drawn down to $148.2bn (Apr '26)** from $155.7bn peak; SBN 10Y yield down to 6.59% in Apr '26 from 7.05% Feb '26 [14]

### b) Stock action — the disconnect

Despite the fundamental thesis intact, BBCA has been a **persistent 52-week-low offender** in Apr-May 2026:

| Date | Price (IDR) | 52w Performance |
|---|---|---|
| 24-Apr-2026 | 6,075 (-5.4%) | -24.7% [17] |
| 30-Apr-2026 | 5,950 (-0.4%) | -29.2% |
| 04-May-2026 | **5,875** (+0.4%) | **-31.2%** [16] |

The stock is down ~34% from CLSA's June-2025 reference (Rp8,925) [3] to the May-2026 low (Rp5,875) [16]. **At Rp5,875, BBCA trades at ~2.4x PB 26CL versus CLSA's 5.2x target multiple** — a near-50% derating that the macro deterioration alone cannot fully explain.

---

## 7. Risks (Per CLSA)

CLSA explicitly enumerates [8]:

1. **Policy changes** affecting outlook + **global uncertainty**
2. **Indonesia political/legal stability risk** — affects earnings *and* multiple paid
3. **Bank-specific operating/credit risk** from day-to-day operations
4. **Franchise erosion**: top-3 SOE banks ramping payments/settlement may dilute BCA's first-mover premium
5. **Djarum Group control risk** — majority owner could change management

Risks 1-2 are clearly *binding* given the Apr-2026 foreign outflow surge [14] and currency weakness flagged in BCA's own deck.

---

## 8. Synthesized View

**The investment thesis is unchanged on substance but increasingly tactical on entry**:

- **Quality argument**: BCA is the dominant CASA franchise (82%), the only big Indonesian bank without liquidity issues (LCR 300% / NSFR 156%) [6][7], compounding earnings at ~21% ROE for decades [1].
- **Defensive moat**: In a tight liquidity regime, the price leader with the cheapest funding base structurally widens its NIM advantage over peers — banks chasing deposits cannot replicate it [6][7].
- **Valuation arithmetic**: At ~2.4x PB 26CL versus CLSA's 25CL PB target of 5.2x [2], the implied 36% upside in the Jun-2025 report has effectively widened to a notional 100%+ on the same TP if conditions normalize. The CLSA TP is from Jun-2025 and would need re-validation given foreign outflows and currency drag visible only in 2026 data [14][17].
- **Operating reality check**: 1Q26 macro indicators are mixed-to-improving (BCA's own data show transactions/spending recovering [13]), but system loan growth has slowed [15] and the equity tape suggests foreign positioning is the dominant short-term driver — not the fundamental story.

**Net**: The thesis remains structurally intact — BCA is the highest-quality consumer/wholesale bank in ASEAN with a CASA moat that *strengthens* in tight liquidity. The current setup is an asymmetric valuation reset where macro/flow factors have compressed the multiple well below the structural fair-value range, with the next NIM cycle (if BI eventually cuts the official RRR per CLSA's policy expectation [5]) as the most credible re-rating catalyst.

---

**Sources**

[1] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — 607962177LinqAlpha.PDF
[2] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — Valuation
[3] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — Recommendation Table
[4] Bank Central Asia – O-PF (Good earnings despite tough macro) — CLSA, 23-Apr-2025 — 607956688LinqAlpha.PDF
[5] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — LDR / Liquidity Conditions
[6] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — LCR/NSFR Table
[7] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — CASA Benchmark
[8] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — Investment Risks BBCA
[9] Bank Central Asia – O-PF — CLSA, 23-Apr-2025 — 1Q25 Result Summary Table
[10] Bank Central Asia – O-PF — CLSA, 23-Apr-2025 — 2025 Guidance / New CEO
[11] Bank Central Asia – O-PF — CLSA, 23-Apr-2025 — Sustaining Margin / CoC
[12] Indonesian banks (Hope floats on liquidity) — CLSA, 17-Jun-2025 — Earnings Trend Table
[13] BCA 1Q26 Analyst Presentation — PT Bank Central Asia Tbk, 23-Apr-2026
[14] BCA 1Q26 Analyst Presentation — Foreign Outflow / FX Reserves / Yields, 23-Apr-2026
[15] BCA 1Q26 Analyst Presentation — Banking Industry Loan Growth, 23-Apr-2026
[16] StreetAccount — Southeast Asia 52-Week Highs/Lows, 04-May-2026
[17] StreetAccount — Southeast Asia 52-Week Highs/Lows, 24-Apr-2026

## 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] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [4] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.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] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [9] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [10] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [11] **607956688LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956688LinqAlpha.PDF>
- [12] **607962177LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962177LinqAlpha.PDF>
- [13] **PT Bank Central Asia Tbk, Q1 2026** · external
- [14] **PT Bank Central Asia Tbk, Q1 2026** · external
- [15] **PT Bank Central Asia Tbk, Q1 2026** · external
- [16] **Southeast Asia Stocks reaching new 52-week highs/lows** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4655216&_doc_date=2026-05-04&_doc_product=SA>
- [17] **Southeast Asia Stocks reaching new 52-week highs/lows** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4639455&_doc_date=2026-04-24&_doc_product=SA>

