Flash Focus: Bank Central Asia (BBCA IJ/Not rated) - Strong Loans, Soft Earnings, MSCI Clouds

BBCA reported 9M26 net profit of IDR45.2tr (+4.2% YoY), supported by NII growth of 1.7% YoY to IDR65.2tr and lower net provisions (-25.6% YoY). PPOP rose 2.5% YoY to IDR58.5tr, while 3Q26 net profit increased 5.6% QoQ to IDR15.7tr, reflecting improving sequential earnings momentum.

Loans grew 12.6% YoY to IDR1,063tr, driven by corporate (+20.9%) and SME (+15.4%), while consumer lending declined 2.2%. Deposits rose 8.0% YoY to IDR1,301tr, with CASA growing 10.4% YoY. Asset quality improved, with gross NPL declining to 1.8% and LAR to 4.6%, although NIM compressed to 5.4% from 5.8% in 9M25.

Management raised FY26 loan growth guidance to 10-11% from 8-10%, while maintaining NIM at 5.4-5.6%, CIR at 31%, LAR at 4.6-4.8%, and CoC at 40-60bps. Loan repricing remains challenging amid competition, while CoF is expected to stay stable. Management remains cautious on FY27 loan demand.

MSCI-related uncertainty remains a valuation overhang despite BBCA's strong fundamentals. Bank-only CAR stood at 27.5%, with approximately IDR4tr of buybacks undertaken over the past year. Management will assess further buybacks based on market and regulatory developments. We remain constructive on BBCA given its superior funding franchise, resilient asset quality, and capital strength, although margin pressure could constrain earnings recovery.