BCA Offically Buys Bank Royal Shares for US$71.42 Million
Board Directors of PT Bank Central Asia Tbk - Photo by the Bank.

JAKARTA (TheInsiderStories) —Indonesia’s largest private lender PT Bank Central Asia Tbk (IDX: BBCA) plans to raise as much as US$36.5 million via the sale of subordinated notes, which are aimed at fulfilling the regulation of systematic important banks requirement on financial system’s recovery plan.

The bonds are offered in three series A, B , and C with alternate tenor of 7, 10, and or 12 years respectively.

For the A series, the company offered coupons range from 7.5 to 8.25 per cent. While for series B and C, the coupons are given respectively at 7.75 -8.5 per cent and 8 -8.75 per cent.

Based on Indonesia Financial Services Authority (FSA) Regulation, BCA as a systemic bank was obligated to issue debt or investment instruments to strengthen its capital buffer by the end of this year.

FSA told the country’s systemically important banks to create a tier-1 capital surcharge of between 1 per cent and 3.5 per cent of risk-weighted assets, depending on the size and perceived riskiness of the lender.

BCA is Indonesia’s largest lender by market value and the second largest bank by assets. The bank has experienced a remarkable recovery from the Asian Financial Crisis in the late 1990s when the Indonesian banking system almost went bankrupt.

In terms of market capitalization, BCA is one of the largest companies in Indonesia with total value of $3.21 billion by April 2018. It provides both commercial and personal banking services through its 1000-plus branches across the country.

BCA is partly controlled by the Djarum Group, one of Indonesia’s largest conglomerates, with its businesses ranging from cigarette manufacturing to property development and management.

Indonesia credit rating agency, PT Pemeringkat Efek Indonesia (Pefindo) has rated BCA idAAA for corporate rating and idAA for subordinated bond instruments. The ratings are based on an assessment of BCA’s performance and capability in meeting its long-term commitments and financial obligations.

The lender reported a net income of 5.5 trillion rupiah ($396 million) for the first quarter 2018, up from 5 trillion rupiah a year earlier, supported by a 15 percent annual increase in loan distribution by the end of March. The company targets 9-10 percent in loan growth this year.

At the end of March 2018, the Bank’s loan portfolio stood at Rp 470 trillion, an increase of 15.0 per cent compared to the same period last year. Corporate loans grew 17.6 per cent YoY to Rp 179.4 trillion, while commercial & SME loans increased by 14.4% YoY to Rp 166.7 trillion.

BCA saw stronger business loan demand in the first quarter of 2018 compared to the previous year. Consumer lending grew 12.0 per cent YoY to Rp 123.9 trillion supported by innovative consumer loan products. Within the consumer segment, mortgages rose by 10.6% YoY to Rp 71.9 trillion and vehicle loans grew by 14.6 per cent YoY to Rp 40.2 trillion.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com