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Corporate
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In line with BCA’s goal of maintaining a high quality loan portfolio, the Bank focuses corporate lending activities on top-tier Indonesian corporate customers with business stability and excellent reputation within their respective fields. Prudent lending to a well-defined and diversified market minimizes risk exposure that may arise from declining performance in any one industry.
In 2014, corporate lending was a main driver of growth in the Bank’s overall loan portfolio. BCA corporate lending grew 16.9% to Rp 120.5 trillion at the end of 2014. Demand for corporate loans rose across most industries in various sectors of the economy as a result of limited alternative funding sources. With a solid balance sheet, BCA is a major lender to the Indonesian corporate segment.
Focus on Customer Needs
In the midst of an unfavorable economic environment, corporate borrowers continued to seek bank lending in 2014. In line with BCA’s commitment to building strong relationships with its corporate customers, the Bank stood ready to provide funding to high quality corporate customers during this period of tight liquidity. Close cooperation and ability to meet customers’ funding needs enabled Corporate Banking to continue its sustainable approach for long-term growth. The Bank maintained its prudent
lending practices by focusing on quality customers and leading institutions who have established good relationships with the Bank.
In 2014, growth in corporate lending was mainly derived from investment loans. This was largely attributable to the drawdown of previously committed facilities and new facilities that catered for selected reputable state-owned companies. The provision of this type of credit facility is expected to generate demand for working capital loans, trade finance, and a variety of other banking services in the future. BCA’s investment loan portfolio in corporate segment increased by 23.4% to Rp 63.7 trillion in 2014, while working capital loans grew 10.4% to Rp 56.8 trillion in the same period.
The overall corporate loan portfolio booked a 16.9%
growth to reach Rp 120.5 trillion in 2014. This growth was mainly derived from state-owned oil & gas company, Pertamina, as well as corporations in the plantation and tourism industries.
BCA provides credit facilities mostly in Rupiah as it matches with the Bank’s source of funds.
Approximately 90% of BCA’s total third party funds are in Rupiah. BCA is one of Indonesia’s top banks which enables the Bank to fund large scale borrowings at competitive Rupiah lending rates to top quality Indonesian corporate customers.
Rupiah Foreign Currencies
2013 103,082 14,065
89,017
2014 120,485 18,914
101,571
(in billion Rupiah)
Investment Working Capital
2013 103,082 51,450
51,632
2014 120,485 56,792
63,693
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Rupiah-denominated loans accounted for the largest portion of 2014’s corporate loan portfolio representing 84.3% of total corporate lending with the remaining 15.7% denominated in foreign currencies. BCA maintains a conservative foreign currency lending profile in order to minimize risks associated with fluctuations in the Rupiah exchange rate against foreign currencies. The Bank has a long standing policy of providing foreign currency lending facilities only to corporate customers with US Dollar or other foreign currency-denominated revenue. This ensures that customers have a source of income that is in line with their credit obligations to minimize exchange risk. In addition, BCA has set a cap on foreign currency loan exposure to the Bank’s portfolio as a whole.
Thanks to comprehensive industry analysis and careful monitoring, BCA has been able to expand its corporate loan portfolio while mitigating the risks the banking sector faces from the declining performances of the commodities sectors, particularly mining. The Non Performing Loans (NPL) ratio on the corporate portfolio stood at 0.4% at year-end, compared to 0.1% in previous year. The increase is due to a
downgrade of a previously restructured corporate loan that showed signs of weakness in the current environment. BCA has adequate credit loss reserves to cover any impact this loan restructuring may have on the financial position of the Bank.
BCA seeks to exploit the opportunities presented by increasing trade flows in Asia, especially with the upcoming implementation of the ASEAN Economic Community (AEC) in 2015. To that end, the Bank continues to strengthen its partnerships with banks in other Asian countries, such as Thailand, Japan, South Korea, China and the Philippines, in facilitating access to the Indonesian markets for corporates in these countries. With its varied banking services, BCA hopes to be able to fulfill the banking needs of these corporate customers.
Loan Syndication
In 2014, the Bank completed syndicated loan transactions amounting to Rp 45.2 trillion, making BCA one of the major players in the field of syndicated loans in Indonesia. Underwriting conducted by BCA reached an equivalent of Rp 8.6 trillion for its
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participation in syndicated loans while the Bank booked Rp 7.7 trillion on its own balance sheet. In 2014, syndicated loans were disbursed to various sectors including telecommunications; power generation; transportation; oil & gas; poultry; and property.
Through syndicated loans, the Bank contributed to the development of Indonesian infrastructure by providing financing to PT Kereta Api Indonesia (Persero), PT KAI Commuter Jabodetabek, state- owned electricity power corporation PT PLN (Persero) and PT Tower Bersama Infrastructure Tbk along with
its subsidiaries. In addition, syndicated loans were disbursed to state-owned oil and gas company, PT Pertamina and a leading poultry feed producer, PT Charoen Phokphand Indonesia Tbk. In the property sector, the Bank disbursed syndicated loans to PT Pakuwon Jati Tbk and PT Bali Raga Wisata as leading property developers in Indonesia.
BCA’s role as a syndicated loans agent makes for a meaningful contribution to fee-based income growth. In carrying out its function as an agent, the Bank may act as a facility agent, collateral agent or escrow account agent.
Top 10 Corporate Loan Portfolios by Industry Sectors
Industry Sector 2014 2013
Plantation and Agriculture 11.2% 10.7%
Chemicals and Plastics 7.3% 7.6%
Power Generation 6.3% 5.8%
Transportation and Logistics 5.9% 6.7%
Consumer Financing 5.7% 7.5%
Telecommunications 5.5% 7.8%
Financial Services* 4.9% 5.7%
Food and Beverage 4.6% 4.1%
Tourism 4.5% 3.2%
Property and Construction 4.5% 3.8%
Total 60.4% 62.9%
* Including credit facilities to other banks
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Community-Based Services
BCA actively creates and develops business community networks connecting corporate customers with commercial & SME customers within one business circle. The Bank made use of its extensive banking network throughout Indonesia to foster value chain lending relationships with these community-based customers.
This community-based service provides large enterprises, commercial and small to medium enterprises with value chain financing for access to credit facilities as well as BCA’s cash management and transaction services.
With its important role as banking services provider, BCA offers ease for corporations and suppliers in controlling daily payment settlements for a more efficient cash management process. The Bank continues to increase its presence in cash management, targeting selected promising business communities and industries especially those in value chains that can strengthen BCA’s transaction franchise, and ultimately cementing the Bank’s strong position in stable Current Accounts and Savings Accounts (CASA) funds. BCA’s reliable cash management services have, over the years, been
utilized by various strategic communities, including public gas stations and convenience store chains.
Individual users of the gas station network and convenience stores also benefit from value chain service with the ability to use BCA payment settlement products, including Credit Cards, Debit Cards as well as Flazz cards for non-cash micro payments.
To meet the growing needs of corporate customers, BCA continued to enhance its cash management infrastructure and interface capabilities for an improved integration with corporate customers’ cash management systems. The development of these value chain networks facilitates businesses to expand further and equips the Bank with the necessary capacity to capture sustainable growth opportunities.
The Bank aims to improve relationships between corporate, commercial and SME clients. Through various networking events in recent years, BCA is actively promoting interaction among the Bank’s corporate customers. In 2014, the Bank organized cross-sector networking events for selected sectors with close business associations. BCA brought together customers from the transportation, logistics and automotive industries in an event themed
“Connecting the New Indonesia” to discuss the
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prospects of transport connectivity across land, air and sea in Indonesia. In addition, the Bank also brought together customers from the property community with those from the tourism community at a seminar on the development of tourism in Indonesia. Interaction between clients is expected to create vibrant multi-industry communities, which in turn forms closer relationships between BCA and these communities.
Going Forward
BCA will carefully monitor developments and trends in each industry sector and in the global economy as well as national developments to determine the most promising industries for lending without compromising the Bank’s prudent lending principles.
Cooperation between BCA Corporate Banking and other business units will continue to be improved to strengthen the Bank’s value chain financing and integrated cash management services. BCA will continue to pursue the ongoing development of more advanced cash management systems and infrastructure.
BCA will continue its partnerships with foreign banks in the Asian region to capture Foreign Direct Investment (FDI) opportunities by providing financing, trade, foreign exchange and cash management services to foreign corporates wishing to establish a presence in Indonesia.
PT Petrokimia Gresik