Corporate Loan Portfolio by Industry Sectors

Corporate Loan by Facilities (in billion Rupiah)

Top 10 Corporate Loan Portfolio by Industry Sectors

Industry Sector 2015 2014

Plantation and Agriculture 10.5% 11.2%

Chemicals and Plastics 7.8% 7.3%

Telecommunications 7.5% 5.5%

Power Generation 5.8% 6.3%

Transportation and Logistics 5.6% 5.9%

Tourism 5.5% 4.5%

Building Material and Other Construction Related 5.1% 4.3%

Consumer Financing 4.9% 5.7%

Food and Beverage 4.5% 4.6%

Property and Construction 4.1% 4.5%

Total 61.3% 59.8%

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PT Bank Central Asia Tbk 2015 Annual Report

In recent years, the commodity sector has come under

pressure due to lower global commodity prices in line with the economic slowdown in Europe and China. BCA has limited direct exposure to the coal mining sector, mostly due to the nature of the industry and the industry’s demand for US Dollar lending. As a Rupiah bank, BCA limits overall US Dollar exposure and, as such, has minimized exposure to the mining sector.

Although BCA does not have direct exposure to the mining industry, the Bank has to be aware of the indirect impacts of the weakening coal and other commodity prices on business. For example, the shipping industry has experienced financial difficulties stemming from the declining volume of mining product transportation. BCA has proactively restructured loans and reduced exposure to this industry over the last couple of years. BCA’s exposure to the sea and river transportation sector is manageable, amounting to Rp 2.2 trillion or 1.6% of the Bank’s total corporate loan portfolio.

In recent years, BCA has had a moratorium on lending to the hotel industry in consideration of the rapid growth of new hotel developments in Indonesia and stiff competition in

the industry. Lending in this industry is limited to borrowers who are experienced in the field and have an established primary business with stable income as an alternative source of loan repayment, if necessary.

Loan disbursement in foreign currency is done by applying prudential standards designed to reduce the potential risk of fluctuations in the Rupiah exchange rate against the US Dollar. BCA has long implemented a policy of lending in US Dollar only to corporate customers whose revenues are mainly denominated in US Dollar. Furthermore, BCA implements a tight limit on overall US Dollar lending as the majority of Bank funding is in Rupiah. At the end of 2015 the corporate loan portfolio in foreign currencies was 11.7%

of the total, with the majority being in Rupiah at 88.3%.

Through caution and prudence, the Bank has been able to

maintain a relatively low Non-Performing Loans (NPL) ratio

in corporate lending of 0.3% at the end of 2015, basically

unchanged from the end of 2014. In an effort to pre-empt

potential NPL, BCA was proactive in initiating discussions

on loan restructuring by carefully monitoring the corporate

loan portfolio.

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PT Bank Central Asia Tbk 2015 Annual Report Syndicated Loans

The unfavorable economic condition in 2015 limited BCA’s participation in syndicated lending, resulting in fewer loan disbursements when compared to 2014. However, the Bank acknowledges the importance in securing a position as one of the major players in syndicated loans in Indonesia for the longer term. Aside from providing interest income, BCA’s active role in syndicated lending has opened the door to increased fee-based income, through cross-selling opportunities and relationship building.

BCA completed syndicated loans worth a total of Rp 25.9 trillion in 2015, down 42.8%, when compared to Rp 45.2 trillion in 2014. In 2015, the Bank’s total participation in syndicated loans amounted to Rp 4.2 trillion, compared to Rp 7.7 trillion in the previous year. In syndications, BCA may act as a sole arranger or together as a facility agent, collateral agent, or escrow account agent, either to debtors or non-debtors.

Infrastructure financing is one source of demand for syndicated financing and is in line with the Government’s plan to accelerate infrastructure development.

Infrastructure syndicated loans in 2015 were distributed for the construction of railway infrastructure and facilities for a 36.3 km railroad line stretching from the center of Jakarta to the Soekarno-Hatta airport; and for business financing in the development of a telecommunications company and its subsidiaries. In addition, the Bank oversaw the full disbursement of a syndicated loan for the Cikopo–

Palimanan (Cipali) toll road, construction of which was completed in 2015. The majority of the funding for this project was sourced from a syndication of 21 banks led by BCA.

In the private sector, BCA participated in syndicated financing to a leading poultry feed producer in Indonesia as well as to borrowers engaged in the consumer industry.

Owing to the active role played by the Bank in syndicated lending, according to data compiled by Bloomberg, BCA was recorded as one of the top ranked syndicated loan book runners in Indonesia in 2015. BCA was awarded ‘Best

Project Finance Deal of the Year in Southeast Asia’ from Alpha Southeast Asia magazine for the Jakarta–Soekarno Hatta Airport Railway Development syndicated loan project of Rp 2.1 trillion (USD 152 million), together with 3 other top banks as joint arrangers.

Community-Based Services

BCA actively lends along business value chains with focus on business community networks that connect corporate customers with commercial and SME customers. This community-based service provides lending facilities alongside cash management and other transaction services.

The Bank’s cash management platform continues to be refined to improve BCA’s ability to capture various value chain financing opportunities. In 2015, BCA developed an internet banking application, ‘KlikBCA Bisnis Integrated Solution’, which contains new modules to further complement corporate cash management services with a more holistic approach for corporate customers. Through cash management services, BCA offers ease for corporations and their suppliers in controlling daily payment settlements for a more efficient cash management process.

BCA continues to deepen cash management market penetration for corporate and commercial customers, as well as business communities by working to increase the customer base and loan portfolio within those communities.

With the weakening growth of interest income due to slowing loan growth, fee-based income plays a more critical role in sustaining the Bank’s profitability. Cash management services are one source of fee-based income that the Bank expects to see grow in the future and that BCA believes will support the Bank’s Current Accounts and Savings Accounts (CASA) position.

In 2015, BCA pursued opportunities in the transportation industry as one promising field for potential business.

With the increasingly high demand for travel by air, the Bank understands the importance of providing ease of transactions for ticket agents offering flight bookings

Corporate Banking

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