Bank Central Asia (BBCA IJ) (Buy) - 1H26 results in-line

1H26 results in-line

BBCA reported decent 1H26 results, with headline net profit of IDR29.5tn (+1.8% y-y) – broadly in line with our expectations at ~50.7% of FY26F. The results were supported by resilient PPOP growth (+2.2% y-y to IDR38.6tn; ~49.2% of FY26F), underpinned by disciplined cost control (opex -6.5% y-y) and a benign credit-cost environment (provisions -1.3% y-y; only ~35.8% of FY26F). These factors largely offset NIM compression as the 2025 BI rate cuts continued to filter through the loan book, while the rebound in SRBI yields—from a 4.8% trough in 4Q25 to 6.6% by 2Q26—renewed pressure on funding costs. Management highlighted accelerating corporate loan repricing into 2H26E as the key catalyst for a NIM recovery.

Macro conditions remain a key swing factor for the 2H26 outlook. Indonesia’s manufacturing PMI slipped further into contraction, to 46.9 in the latest reading, while consumer spending has remained broadly flat since early 2026. Meanwhile, SRBI yields have rebounded sharply to 6.6% on a 3-month moving-average basis as of Jul-26, alongside a weaker rupiah of ~IDR18,000/USD. These headwinds suggest that any NIM recovery is likely to be gradual rather than sharp, although newer loans would have higher lending rate of 50-100bp.

2Q26 results summary

NII reached IDR21.6tn (+1.6% q-q; +0.3% y-y), bringing 1H26 NII to IDR42.8tn (+0.4% y-y) – accounting for ~48% of our FY26F estimate. The flat NII trajectory reflects persistent NIM compression – bank-only NIM declined ~40bp y-y and ~20bp q-q to 5.3%, tracking just below the low end of management's unchanged FY26 guidance of 5.4-5.6%.
PPOP reached IDR19.2tn (-0.7% q-q; -0.3% y-y), bringing 1H26 PPOP to IDR38.6tn (+2.2% y-y) – accounting for ~49% of our FY26F estimate.
Provision expense reached IDR752nn (-38.9% q-q; -23.3% y-y), bringing 1H26 provision expense to IDR2.0tn (-1.3% y-y) – accounting for ~36% of our FY26F number.
Net profit reached IDR14.9tn (+1.1% q-q; -0.2% y-y), bringing 1H26 net profit to IDR29.5tn (+1.8% y-y) – accounting for ~51% of our FY26F number.
Loan growth of 8.0% y-y (+4.3% YTD) was corporate-led (+13.6% y-y, now 49.6% of the book) on accelerated investment-loan drawdowns (+21% y-y, utilization up to 82%), while consumer lending contracted 2.4% y-y as auto loans fell 21.5% y-y on continued tightened underwriting (min. 20% down payment) amid a still-soft industry car market.
Deposits increased by 7.9% y-y, mainly on current accounts (+15.3% y-y) and savings accounts (+6.9% y-y), the two highest contributors, while time deposits declined 2.8% y-y as flush CASA liquidity reduced reliance on costlier funding. This brings the CASA ratio to 84.3% (flat q-q, +180bp y-y) and LDR of 78.2% (+400bp q-q, +10bp y-y).

Valuation and risks

Our TP of IDR10,100 is based on a DuPont analysis, with key parameters as: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.9x and a CAR-adjusted ROAE of 24.5%. Our TP implies 4.1x FY26F P/B (vs current price valuation of 3.3x) and 20.8x FY26F P/E (vs current price valuation of 16.9x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.