Working capital and investment loans in the commercial and SME segments are disbursed to small and medium-sized enterprises and business owners primarily engaged in small- scale manufacturing, trade and distribution. BCA redefined the limits for commercial loan facilities as loans with a nominal value above Rp 15 billion and up to Rp 500 billion (previously from Rp 10 billion to Rp 350 billion), while the SME loan category covers loan facilities with nominal values below Rp 15 billion (previously Rp 10 billion).
Business owners were more cautious in managing their businesses in 2017, including planning on working capital and investment. This resulted to relatively soft loan demand throughout the year, except for the period leading up to Idul Fitri and toward the end of the year. This modest credit demand is in line with the customers’ focus on increasing efficiency in production and labor costs, and the reduction of interest expenses through the use of credit facilities specifically matching unique business needs. Customer owned funds related to the tax amnesty program were allocated and circulated in the business sector, reducing credit demand.
BCA’s wide lending network enabled it to successfully grow its commercial and SME loan portfolio, despite relatively soft demand. The Bank saw growth in its commercial and SME loan portfolio of 10.3% to Rp 164.7 trillion in 2017.
BCA continues to offer competitive interest rates in accordance with market demand and in line with the decline in benchmark interest rates, to maximize commercial and SME lending. To minimize risk, BCA lending was disbursed across a number of growth-promising sectors and sectors with business resilience.
2016 2017
Commercial and SME Loan Portfolio
(in billion Rupiah)
52,240
65,925
97,052 98,735
Small and Medium Enterprise (SME) Commercial
BCA continues to strengthen its infrastructure by enhancing the role of commercial business centers, refining the processing of credit applications and enhancing the capabilities of account officers, to further enhance the commercial segment. There were 14 commercial business centers by the end of 2017, located in major business and commercial hubs in Indonesia, including Jakarta, Semarang, Bandung, Surabaya and Malang;
and in cities outside Java, such as Medan, Palembang, Lampung, Makassar, Denpasar, and Balikpapan. BCA posted a commercial loan portfolio of Rp 98.8 trillion in 2017, growth of 1.7% year- on-year, contributing 60.0% of the total commercial and SME loan portfolio. The redefinition of new limits for commercial and SME loan facility also flattened commercial loan growth as a portion of commercial loan migrated to SME loan category. Growth in the commercial portfolio mainly came from the metals and related industries, packaging, distribution and wholesaler and retailer industries.
The majority of BCA’s SME customers are family-owned small businesses, shop owners, restaurant owners and small-scale factory owners. The Bank capitalizes on its strategically dispersed network of branches in trading centers in various cities in Indonesia to provide SME loans. BCA develops specialized credit products and scheme, such as loan programs
schemes), warehouse financing, commercial property loan for business purpose and micro enterprise loans, to enhance its SME lending capability and competitiveness. BCA implements an online and centralized credit application analysis and risk managenent system, enabling risk control for early detection of potential non-performing loans, to support the SME loan process.
BCA engages in strategic collaboration with third parties having established infrastructure in the SME segment - loans with nominal values below Rp 500 million – to maximize the SME loan segment. The Bank collaborates with institutional partners such as rural banks and cooperatives, to provide direct loans through channeling programs and indirect loans, to support SME lending in areas less accessible by the BCA branch network. BCA also works with subsidiary BCA Syariah to develop products and services for SME customers, as BCA Syariah is strategically positioned to provide SME financing services.
BCA SME loans grew 26.2% to Rp 65.9 trillion and contributed 40.0% to the total commercial and SME loan portfolio in 2017.
This increase was partly due to Rp 5.4 trillion in consumer loans reclassified as business loans. The growth came mainly
Commercial and SME Banking
Business Review
and other building material and other construction related sectors; and textiles and textile related products. BCA Syariah booked a Rp 927 billion of SME loan, an increase of 10.0%.
BCA faces stiffer competition in the commercial and SME segments compared to other loan categories. Small to large banks in Indonesia enter and compete in this segment. Small to medium-sized banks focus on commercial and SME lending, given their limitations in liquidity and capital for extending credit to the corporate segment. A high cost of funds structure limits these small to medium-sized banks from providing competitive interest rates for consumer loans.
Responding to this, BCA expanded its capabilities through several initiatives. While strengthening its established commercial business centers for commercial lending, the bank initiated a pilot project for Micro, Small and Medium-sized Enterprise (MSME) centers in several regions. Through these centers, the Bank intends to acquire new MSME customers, while maintaining healthy loan quality. The centers manage BCA’s MSME lending, acquiring customers by utilizing data analytics and supporting loan processing to loan disbursement.
With the development of these MSME centers, branch offices can increasingly pay attention to improving customer
relationships in other segments with higher exposure.
BCA assists account officers and relationship officers to be more focused in building relationships with customers. BCA increased the number of account officers and relationship officers to better support business growth. The Bank also continuously improves the quality of account and relationship officers to adapt to changes in business conditions, providing sound knowledge of lending products, business evaluation and customer relationship capabilities. The Bank also continues to develop analytical and supporting tools, such as mobile apps, to facilitate account officers and relationship officers in obtaining customer information, thus enabling it to provide more suitable services. Commercial and SME Banking collaborates with BCA Corporate Banking to develop value chain business initiatives across a number of industries, such as capital market communities and futures markets, oil and gas, telecommunications, modern markets, aviation services and public service communities.