2018 Annual Report PT Bank Central Asia Tbk
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In 2018 BCA recorded 15.4% growth in commercial and Small and Medium Enterprises (SMEs) loans to Rp190.0 trillion, a higher rate than the previous year. The increase in the commercial and SME loan portfolio was driven by a rise in credit demand.
In its efforts to optimize commercial and SME lending, BCA continues to strengthen credit infrastructure, including by increasing capability of human resources and utilizing technology to improve process efficiency.
The work plans of commercial and SME lending are supported by a broad network of branch offices.
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2018 Annual Report PT Bank Central Asia Tbk 121 At the same time, we made developments to
cash management services in accordance with the specific needs of customers and supported by the latest technological advancements. The role of cash management is increasingly important in supporting growth of current accounts and savings accounts, and increasing fee-based income.
Commercial and SME Loans
BCA distributes commercial loans with limits ranging from Rp15 billion to Rp500 billion, while SME loans cover loan facilities with nominal values below Rp15 billion.
'ROWTH OF THE COMMERCIAL AND 3-% PORTFOLIO WAS achieved by prioritizing lending to those customers with a good track record, although we also process credit requests from new customers who demonstrate quality and have positive business prospects. Through the use of technology and a large customer base, BCA identifies potential quality customers who are currently not debtors, while also exploring the credit needs of existing debtors. We achieved commercial and SME credit growth of 15.4% to Rp190.0 trillion. This growth was supported by the rise in demand for credit, especially in building material and other construction related credit, as well as consumption and the household sector. In 2018, investment loans for the commercial and SME segments showed higher growth compared to the previous year.
To support commercial loan growth, we continue to strengthen our lending infrastructure, including by increasing the role of the commercial business center.
In 2018, BCA served its commercial customers through 14 commercial business centers located in Indonesia’s central business areas and trade cities, such as Jakarta, Semarang, Bandung, Surabaya and Malang, as well as a number of cities outside Java. In 2018, BCA recorded 13.5% growth in commercial loans, with the portfolio standing at Rp112.1 trillion by the end of the year.
BCA also achieved solid SME loan growth with an 18.2%
increase to Rp77.9 trillion. This growth came mainly from distributors, wholesalers and retailers. Most of the Bank’s SME customers are family business owners, shop and restaurant owners, and small-scale factory owners.
BCA’s SME lending is supported by a branch network spread strategically through trade and urban centers in Indonesia.
We continue to implement initiatives to grow credit portfolio, including the development of special credit products and schemes aligned with the needs of SME customers, such as trade area credit programs, business communities (like showroom financing schemes), warehouse ownership, and mortgage loans for commercial investment. These credit schemes underpinned positive achievements in 2018.
For SME lending below Rp500 million, BCA works with institutional partners who have specialized capabilities, such as rural banks and cooperatives, through channeling programs. BCA also built upon synergy with its subsidiary, BCA Syariah, to better serve the needs of SME customers.
Continuing on from the previous year, we developed
We continue to strengthen our capabilities in commercial and SME lending, as well as cash
management solutions. Efficiency and quality of service
are a primary focus in the development of processing
systems for commercial and SME loans.
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centers for Micro, Small and Medium-sized Enterprises (MSME) whereby, at the end of 2018, we had MSME centers in seven regions. The loan portfolio managed by the MSME center showed promising growth with solid asset quality. The MSME centers play a core role in centralized credit processing, especially in acquiring new quality debtors based upon analytical data. In addition, MSME centers can also accelerate credit processing up to credit realization. These MSME centers allow branch offices to focus more on improving relationships with debtors.
BCA’s commercial and SME credit growth is inseparable from the contribution of reliable relationship managers and account officers. Relationship managers and account officers support and maintain relationships between BCA and its customers. We always ensure the quantity and quality of relationship managers and account officers to grow commercial and SME lending. Our team is equipped with product and service knowledge as well as information on the customers’ business development, to explore potential credit needs of customers.
In 2018, BCA commercial and SME banking continued to strengthen its synergy with corporate banking through value chain financing. Development of distributor and supplier financing continued, focusing on a number of companies with clear potential. We held regular workshops, outreach programs and updates for customers on the latest business solutions, as well as hosting business gatherings to enhance insight and strengthen relationships amongst community members.
By building close relationships within the business community, we can strengthen the BCA banking franchise as a whole, with regard to lending, transaction banking services and various other financial solutions.
We proactively adjust interest rates in line with benchmark rate trends. The Bank continues to exercise prudence in its lending activities and implements prudent risk management, supporting sound credit quality with a commercial and SME Non-Performing Loans (NPL) ratio of 1.6%, relatively better compared to the previous year’s 1.8%. Lending is focused on customers who have clear business potential and demonstrate resilience.
2018 Annual Report PT Bank Central Asia Tbk 123 Cash Management
In meeting the needs of the business chain for cash management solutions, we provide cash management services supported by the latest technology, extensive network infrastructure and products and services that are continuously refined in accordance with customer needs. The role of cash management is increasingly important in generating fee-based income and funds.
The provision of cash management services connects customer businesses with the BCA payment system, and supports the Bank’s efforts in strengthening its transaction banking business. BCA offers comprehensive cash management services for business segments.
Through cash management, we facilitate the Business- to-Business (B2B) and Business-to-Consumer (B2C) transactions of companies from various industrial sectors. In 2018, the number of commercial and SME companies using BCA cash management solutions was more than 150,000.
BCA cash management takes the form of a community, namely a group of companies that are related to one another through their business chain, from suppliers to distributors. Communities managed by BCA include the capital market, futures market, oil and gas, digital businesses and telecommunications. In the capital market community, BCA has collaborated with the )NDONESIAN #ENTRAL 3ECURITIES $EPOSITORY +3%) FOR THE role of customer fund account (RDN) administration bank and payment bank. We have opened RDN for 92 securities companies, with total managed accounts reaching more than 420,000, a major RDN market share.
In the oil and gas community, more than 80% of gas stations in Jakarta are now BCA merchants, and most of them make payments to their principals through the BCA system. BCA also accepts payment from customers FOR,0'LUBRICANTSAVIATIONANDPETROCHEMICALSASWELL AS PURCHASE ORDERS FROM THE AGENT TO THE ,0' HUBS
"#!HASALSOINCORPORATEDmEETCARDSTOSUBSTITUTECASH NEEDED BY mEETS WHEN DISTRIBUTING OIL AND GAS FUEL to gas stations. In the public sector, BCA collaborates
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with strategic partners like government agency BPJS to facilitate payments for social security scheme and health insurance program. At present, BCA facilitates BPJS Social Security payments for around 32,000 customers and BPJS Health Insurance payments for more than 180,000 customers.
The Bank’s virtual account service has become an important feature of cash management. With a virtual account, merchants can receive information on their customer payments and simplify the transaction reconciliation process. In 2018, BCA saw a significant increase in the use of virtual account services from 3,500 companies in the previous year to over 5,000 companies, largely due to the growth in e-commerce business.
The trend of digital business development drove us to continue to innovate and seek opportunities for collaboration with these companies. To meet customer needs in the field of e-commerce and digital startups, we develop Application Programming Interface (API).
Through the API platform, fintech and e-commerce companies can connect their systems with BCA banking services. Currently, more than 700 companies are using BCA’s API service. To introduce API services, we actively disseminated information regarding the use of APIs to customers throughout 2018.
One important factor in the success of cash management services is the quality of employees. We develop and brief employees in branch offices and regional offices regarding cash management solutions to further improve the quality of the service delivered to customers.
Looking Ahead
We will continue to explore potential in lending to commercial and SME customers who demonstrate strong business potential. Efficiency in processing loan applications will continue to be improved, while maintaining healthy credit quality remains a focus. We increasingly use technology and analytics to grow our credit customer base and to provide banking solutions that are appropriate to the needs of customers.
Commercial and SME banking continues to strengthen synergies with other business units, including corporate and individual banking, in the provision of comprehensive financial services and solutions. BCA believes this close synergy will support the Bank’s efforts to strengthen long-term relationships with customers throughout the business chain.
2018 Annual Report PT Bank Central Asia Tbk 125 To support the growth of commercial and SME loans
going forward, we will continue to make measured investments in credit infrastructure. The role of the commercial business centers and MSME centers will continue to be optimized as the Bank’s credit activities develop. We consistently enhance competency and maintain adequate human resources in order to support the effective provision of commercial and SME credit services.
Commercial and SME banking will examine potential sectors and work with other business units to offer total solution in cash management. We always strive to understand the specific needs of each business community and provide suitable cash management solutions.
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Individual banking continues to grow in line with the growing middle class, both from business and PROFESSIONAL BACKGROUNDS 'ROWING CUSTOMER NUMBERS in various segments create an increasing need for individual banking solutions, which drove the individual banking business in 2018. We offer a wide range of individual banking products and services, including
mortgages, vehicle loans, credit cards, deposits, bancassurance, and an array of investment products.
The Bank’s large customer base provides great potential for BCA to offer individual banking products. BCA also leverages technological advancement by using analytic tools to better understand customer needs and offer suitable solutions for individual banking.
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