In the last decade, consumer loans grew 24.1% in terms of Compound Annual Growth Rate (CAGR), at Rp 122.8 trillion by the end of 2017. Consumer loan contribution to BCA’s overall loan portfolio has grown overtime, and at the end of 2017 were 26.3% of total BCA loans. Consumer lending focuses on mortgages, vehicle loans and credit cards.
Mortgages
BCA offers mortgages to qualified customers and focuses on financing houses in prime residential areas. Mortgages are the Bank’s flagship product in building long-term relationships with customers and providing other financial products to mortgage customers. The relatively low level of mortgage penetration in Indonesia is an opportunity for BCA to develop its mortgage products in the long run.
introduced mortgages with lower interest rates - the five-year Fix and Cap - with a fixed rate of 6.0% for the first two years, followed by a maximum three-year cap at 6.88%, requiring a minimum account balance three times the initial installment throughout the loan period. BCA is also developing mortgages with a new planned installment feature, offering a lower initial installment. These initiatives have received a positive response, and BCA’s mortgage portfolio grew by 14.2% to Rp 73.0 trillion in 2017. Mortgages contributed 59.4% to total consumer loans and 15.6% to the Bank’s total loans. BCA strengthened its position as the primary choice in mortgage products with a market share of 17.8% in 2017, up from 17.4%
in 2016.
BCA’s mortgages are offered through a vast network of branches and consumer credit centers in major cities throughout Indonesia. The Bank manages consumer credit offices in targeted major cities which also provide supports for the processing and administration of mortgages. With its large customer base, most mortgage applications come from branch referrals, and the remainder from developers and property brokers. BCA also provides online web-based mortgage applications for customer convenience.
BCA has consistently received awards from national and international agencies for its achievements in the mortgage business. The Bank was named Mortgage and Home Loans
Product of the Year (Fix & Cap) – Indonesia Country Awards Program for Retail Financial Services by Asian Banker; and the Net Promoter Customer Loyalty Award – Mortgage Category from SWA magazine, in 2017.
Vehicle Financing
BCA manages vehicle financing facilities through its subsidiaries: BCA Finance for car financing, and Central Santosa Finance (CS Finance) for motorcycle financing. It uses joint financing, where the main portion of funding is provided by BCA and recorded on its balance sheet, while the remainder comes from BCA Finance and CS Finance and is recorded on their balance sheets. Through the scheme, the subsidiaries have a robust and stable funding structure with low interest.
Automotive and financing industry performance was relatively stagnant in 2017, following on from the previous year. New car sales had a slight increase at 1.6%, recorded more than 1 million units, while new motorcycle sales decreased slightly by 0.7% at 5.8 million units.
BCA’s car loan portfolio continued to show positive growth, in the midst of non-conducive automotive industry conditions.
The Bank’s total car loan portfolio (including BCA Finance) grew 13.7% to Rp 42.8 trillion in 2017, increasing market share to 17.3% from 15.3% in 2016. BCA Finance maintained its position as the top of mind, leading car financing in Indonesia, through a combination of innovative products and attractive promotions. It saw business growth by offering competitive interest rates and strengthening its collaborations with dealers and showrooms. It offered 36-month car loans with a competitive interest rate of 3.6% (flat rate) from February to July 2017.
BCA Finance relies on fast and convenient services to improve competitiveness and maintain customer satisfaction with its services, and to be higher than customer expectations.
It leveraged technological advances to develop a range of applications, such as mobile entry, mobile approval, mobile collection and others, to improve operational efficiency and sustain marketing activities. BCA Finance provides car financing simulations through mobile applications to help customers. It also facilitates customer needs for car financing outside working days through weekend services at Wisma Pondok Indah and a service point at Mall Artha Gading, given their high visitor numbers and strategic locations.
BCA is disciplined in maintaining collateral quality and providing convenient payment methods, in addition to improving service quality and simplifying financing processes.
The Bank has a high down payment policy and prioritizes financing for popular vehicles widely accepted by the Indonesian automotive market. This maintained the non- performing loan ratio at a low level with high recovery rates on foreclosed loans, while still maintaining positive loan growth. Through BCA Finance, the Bank provides car financing in the secondary market to obtain higher interest income.
For motorcycle financing, BCA increased its ownership in Central Santosa Finance (CS Finance), with direct and indirect ownership, from 70% to 100%. in 2017, to further align the strategic direction and business activities and strengthen operational integration.
Motorcycle financing demand was relatively stagnant in 2017 due to modest economic conditions, and BCA’s financing (including CS Finance) fell 22.6% to Rp 4.4 trillion. BCA and CS Finance are more focused on improving the quality of motorcycle financing and more prudent in disbursing loans.
As a result, BCA’s NPL for motorcycle financing was at 3.0%
in 2017, from 3.8% in 2016. In addition to marketing through BCA’s branch network, CS Finance developed a partnership with selected dealers.
Credit Cards
BCA maintained its position as a major credit card issuer in Indonesia and made enhancements to the BCA Card proprietary card. The Bank managed 3.3 million credit cards with a transaction value of Rp 60.9 trillion in 2017, growth of 13.3% and one of the largest in Indonesia. Credit card outstanding was Rp 11.5 trillion at the end of 2017, up by 6.9% from 2016. BCA is prudent in managing the quality of credit cards. NPL ratio for credit cards remained low at 1.9%
at the end of 2017.
BCA continues to expand its BCA credit card merchant network across Indonesia, and in Singapore through collaboration with the NETS network, to support transaction performance. The Bank also works closely with leading international networks VISA, Mastercard, American Express (AMEX), JCB and China UnionPay in acquiring/accepting business. BCA worked with AMEX for the American Express Platinum Card for the upper middle segment in 2017, and continued to strengthen its card issuing partnerships with VISA and Mastercard across various
Individual Banking
Business Review
segments. The credit card business is an essential element of transaction banking. Further details on credit cards can be found in the Transaction Banking section of this report.
Looking Ahead
BCA’s large customer base brings opportunities to expand the individual banking business. The growing middle class and professionals generate increased demand for individual banking services, such as mortgages, vehicle loans, credit cards, bancassurance and other products.
BCA is in a favorable position to capture new opportunities as they arise, supported by both the branch network and electronic banking platforms. The synergy among business units and subsidiaries will continue to be strengthened to support a more effective provision of individual banking products and services.
BCA believes that a thorough understanding of customer behavior and needs is the foundation for developing products and services and to support marketing and promotional activities. As a result, the Bank continuously improves its analytic capabilities and Customer Relationship Management (CRM) system, which will ultimately provide the right financial solutions. BCA will further leverage on the advancement of digital technology to support future business growth.