XA Update Report | PT Bank Central Asia Tbk. (BBCA) – 2Q26: Operational Resilience Intact as Business Lending Regains Momentum, While Higher Funding Costs Weigh on NIM

 

 

By Leonardo Lijuwardi

30-July-2026

 

 

BBCA once again delivered resilient earnings in 1H26 despite slowing domestic economic activity. Net profit grew 1.8% YoY to IDR 29.5T (1H25: IDR 29.0T | Quarterly Basis: -0.1% YoY; +1.1% QoQ; 2Q26: IDR 14.9T | representing 48.8% of our FY26 earnings estimate), supported by Pre-Provision Operating Profit (PPOP) of IDR 38.4T (+2.5% YoY; Quarterly Basis: -1.7% YoY; -0.8% QoQ; 2Q26: IDR 19.1T). Although Net Interest Income (NII) declined 0.6% YoY to IDR 42.5T, primarily due to a 7.8% YoY increase in interest expenses to IDR 7.25T, resilient Non-Interest Income, which expanded 11.0% YoY to IDR 13.2T, continued to support profitability and sustain positive earnings growth. Profitability was primarily pressured by higher Cost of Fund (CoF) following deposit repricing after the cumulative 75 bps BI Rate hikes, resulting in Bank Only NIM contracting to 5.3% in 1H26 (1H25: 5.8% | Quarterly Basis: 1Q26: 5.4%; 2Q26: 5.3%). Nevertheless, margin pressure was partially offset by resilient fee-based income, disciplined cost management, and healthy asset quality. This was reflected in a Cost-to-Income Ratio (CIR) of 29.3%, remaining comfortably below management’s FY26 guidance of 31–33%, highlighting BBCA’s ability to preserve profitability despite a softer domestic operating environment.

 

 

 

🔹Lending Side: Business Banking Regained Momentum in 2Q26

 

• Business Banking Re-emerged as the Primary Growth Driver. Loan growth regained momentum in 2Q26 following a relatively soft start to the year. Total outstanding loans increased to IDR 993.8T, representing 8.0% YoY growth (Quarterly Basis: +4.2% QoQ), primarily driven by stronger Business Banking demand. Corporate loans expanded 13.6% YoY and 6.1% QoQ to IDR 513.4T, while Commercial loans grew 7.2% YoY and 6.0% QoQ to IDR 153.9T, reflecting improving financing demand from the private sector despite a still-subdued domestic economy.

 

 

• Consumer Lending Remained Soft. Consumer lending remained relatively sluggish, declining 2.4% YoY and 0.2% QoQ, reflecting still-weak domestic consumption alongside BBCA’s continued emphasis on maintaining asset quality rather than pursuing aggressive volume growth.

 

 

• 2H26 Outlook. Looking ahead to 2H26, management indicated a more proactive lending strategy, with greater emphasis on expanding private corporate lending. BBCA’s exposure to State-Owned Enterprises (SOEs) remained conservative at approximately 11% of total loans as of 2Q26, with the majority concentrated in high-quality financial institutions, including BBTN and Pegadaian. Supported by an improving corporate loan pipeline, management maintained its FY26 loan growth guidance of 8–10%, which we believe remains achievable. Meanwhile, stronger corporate loan disbursements are expected to gradually lift loan yields, providing an additional catalyst for NIM recovery over the coming quarters.

 

 

🔹 Funding Side: Funding Franchise Remained Resilient Despite Higher Funding Costs

 

• CASA Franchise Continues to Anchor Funding Stability. From a funding perspective, BBCA’s liquidity profile remained fundamentally solid, underpinned by its industry-leading CASA franchise. The deposit mix remained largely unchanged from the previous quarter, with low-cost CASA deposits continuing to dominate total funding. Growth in Current Accounts and Savings Accounts largely offset the normalization in time deposits, demonstrating the resilience of BBCA’s funding franchise despite intensifying industry-wide competition for deposits. Consequently, CASA Ratio remained healthy at 84.3% in 2Q26.

 

 

•Higher CoF Continued to Pressure Margins. Meanwhile, higher Cost of Fund (CoF) remained the primary headwind throughout 1H26 following deposit repricing triggered by the cumulative 75 bps BI Rate hikes. Combined with still-soft loan yields, rising funding costs continued to weigh on Net Interest Margin (NIM). Nevertheless, given BBCA’s resilient 84.3% CASA Ratio, we believe current margin pressure remains largely cyclical and driven by higher funding costs rather than any deterioration in BBCA’s funding franchise.

 

 

🔹Asset Quality Remained Healthy and Well Within Guidance

 

• Asset quality remained stable throughout 2Q26, with no signs of meaningful deterioration. Gross NPL edged up slightly to 1.9% (2Q25: 2.2%; 1Q26: 1.8%), while Loan at Risk (LAR) continued to improve to 4.9% (2Q25: 5.7%; 1Q26: 5.1%). Meanwhile, NPL and LAR Coverage Ratios moderated to 165.5% and 68.7%, respectively, while remaining at comfortable levels.

 

 

• In addition, Cost of Credit (CoC) declined to 0.4% in 2Q26, bringing the 1H26 CoC to 0.5%, well within management’s FY26 guidance of 50–60 bps. Overall, we believe BBCA’s prudent underwriting standards and disciplined risk management continue to support healthy asset quality and provide ample earnings resilience.

 

 

 

🔹FY26 Outlook: 2H26 Recovery Supported by Improving Business Lending Despite Higher Funding Costs

 

• Looking ahead, we expect loan growth momentum to improve further in 2H26, supported by stronger private corporate lending activity and a more proactive lending strategy. Improving corporate loan disbursements should gradually support higher loan yields, providing a meaningful tailwind for NIM recovery over the coming quarters. Management maintained FY26 guidance for loan growth of 8–10%, NIM of 5.4–5.6%, and Cost of Credit of 50–60 bps. Reflecting our more conservative funding cost assumptions, we revised our FY26 earnings forecast to IDR 59.7T (NHKSI Research previous forecast: IDR 60.7T). to capture a more normalized margin outlook. However, the revision primarily reflects higher funding costs rather than any deterioration in BBCA’s core operating fundamentals. We therefore continue to maintain a constructive medium-term outlook on the stock.

 

 

 

🔹 “Buy” Recommendation with Target Price at IDR 8,200 / Share (Upside Potential of +30.7%)

 

• NHKSI Research maintains “Buy” recommendation for BBCA while lowering our Target Price to IDR 8,200/share, implying 26F P/BV of 3.1x (1 SD below its three-year historical average), offering an upside potential of 30.7%. We believe the recent share price correction has largely priced in concerns surrounding higher Cost of Fund, NIM compression, and our earnings revision. Despite near-term margin pressure and an increasingly competitive banking environment, BBCA continues to demonstrate one of the strongest banking franchises in Indonesia, supported by its industry-leading CASA base, healthy asset quality, and consistent operating discipline. Looking ahead, we expect gradually improving corporate lending, recovering loan yields, and easing funding cost pressure to become key catalysts for NIM recovery and earnings reacceleration over the medium term. Key downside risks include prolonged macroeconomic and political uncertainty, intensifying competition within the banking sector, weaker-than-expected loan growth, and further downside pressure on NIM.

 

 

 

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NH Korindo Sekuritas Indonesia berizin dan diawasi Otoritas Jasa Keuangan (OJK). Untuk informasi lebih lanjut, anda dapat menghubuni CS kami via email CSO@nhsec.co.id