The bank, which is known for its caution and conservatism, was well-positioned in the event of a pandemic. It is well positioned to thrive after the crisis is past, thanks to investments in digital banking and risk management.
Euromoney has witnessed a good bank get stronger in numerous damaged nations, establishing its resilience, moving ahead in digital, and putting more distance between itself and domestic counterparts.
And the most powerful illustration of this on a global scale is Bank Central Asia, Indonesia's best-run bank under the long-serving leadership of president director Jahja Setiaatmadja.
In the face of adversity, the bank increased assets by 17%, deposits by 19%, and profits by 12% By 2020, current account savings accounts (CASA) will have increased by 21%.
Transaction banking, the BCA's core, increased 34.8 percent year over year to 11,6 billion transactions, while mobile transactions increased 62 percent year over year until the end of March 2021.
Only by looking at the peer group can you see the competitive advantage. After accounting for contingencies, BCA's net profit fell by 14.4% to Rp217.trillion ($1.89 billion) in 2020.
Besides, BCA's decline was short-lived. Even after allowances, net profit for the first half of 2021 increased by 18,1% year over year.
The figures indicate a great deal. Operational expenses decreased by 12,1 percent year over year in the first half of 2021, including an 18 percent decrease in manpower costs, while operating income increased by 2,4 percent, with fees and commissions (a more difficult element of banking to obtain than net interest income) up 7,5 percent.
This story is about a well-run company that has responded to bad times by cutting expenses in an already lean operation and discovering innovative ways to make money in challenging times.
A 16,6 percent return on equity (ROE) - which is on the rise despite everything going on around it - and a 25,3 percent capital adequacy ratio are two other examples of this ability.
The bank's culture is the opposite side of the coin. It has long been known - and admired by investors - for its conservatism: it knows what it is good at, never ventures outside of the country, and rejects a lot of business.
Covid had significant financial buffers in place and had worked long and hard on two things that paid off dramatically: the most polished risk management approach in the industry and a full digital platform, long before anyone had heard of it.
When the pandemic struck, both of these items were critical. This was a theme that ran through Asia and the rest of the world: those with a strong digital offering were able to accelerate quickly, while those without struggled to catch up.
The number of clients using BCA's digital platform increased by 46 percent, while daily transactions increased by 98 percent. This, in turn, fueled CASA's expansion: "Which allows us to cherry-pick high-quality loans, a saving grace during uncertain times," the bank argues.
These were not brand-new concepts that appeared in the wake of the pandemic. But they were accelerated by circumstances.
The average daily number of digital transactions has increased by 150 percent in three years, and the volume of application programming interface transactions has increased by 3.5 times in two years. The average number of internet accounts opened per day grew 193 percent in a year.
The load portfolio is remarkable for its diversity and robustness on the risk side. There is no prominent sector in the loan book and due to credit screening, in-house exposures are remarkably low.
Take mining, for example: it accounts for only 0.4 percent of BCA's book, compared to 2.3% for the industry, and whereas the banking sector's NPLs on mining exposures are 7.7%, BCA's are only 1%.
BCA has been struck hard by the crisis: it booked Rp97,5 trillion in credit restructuring last year, accounting for 16.9% of total loans, with 87.9% of that attributed to the pandemic.
But these are extensions and deferrals in the main and there are already indicators that borrowers are coming good again and that very little of this risk will be wiped off.
The result of all of this is that it pays off in other ways. For years, BCA has had the lowest cost of financing in the industry and the distinction became starker even through the pandemic.
In certain industries, such as transaction banking, there was a flight to quality as institutional customers backed up their bets with names they knew would be standing at the end of the pandemic.
This year, Setiaatmadja celebrated ten years as the president of BCA. It's been ten years of caution and focus. This is the ideal year to honor it with a global award from Euromoney.