Indonesia’s BCA posts record annual profit, buoyed by tax amnesty

Bank Central Asia (BCA) on Monday reported an all-time high annual net profit, as Indonesia’s key tax amnesty programme helped to lower cost of funds for the country’s biggest lender by market value.

BCA posted a 2016 net profit of 20.6 trillion rupiah (S$2.17 billion), up 14.4 per cent from a year ago. This was a record high and also slightly above an average estimate of 20.0 trillion rupiah from 21 analysts.

Indonesia’s tax amnesty scheme, launched last July and aimed at bringing back billions of dollars stashed abroad by citizens, boosted the funds at BCA’s current accounts and saving accounts (CASA) in the second half of 2016, the bank said in a statement.

“Tax amnesty funds were parked at CASA,” BCA President Director Jahja Setiaatmadja told reporters. “What’s positive is that our cost of funds is low because our interest rate is low.”

However, some of those funds were only “transitioning” at BCA and would likely be placed eventually in assets including property and government bonds, Mr Setiaatmadja said.

At the end of 2016, BCA’s gross non-performing loans (NPL) stood at 1.3 per cent, one of the lowest in Indonesia’s banking sector.

BCA’s rival, Bank Mandiri, last month reported its lowest annual net profit in five years due to an increase in provisions. Mandiri’s gross NPL of 4.0 per cent was the highest since 2008.