Learning the 'Art' of Taking Off Credit a la BCA (BBCA) boss Jahja Setiaatmadja

There is an art in channeling bank credit. Instead of profit, disbursing credit carelessly can actually make the bank stagnate.

There is an art in distributing bank credit. Instead of profit, disbursing credit carelessly can actually make the bank stagnate.

That's roughly what the President Director of PT Bank Central Asia Tbk said. ( BBCA ) Jahja Setiaatmadja. According to him, lending at BCA is not done arbitrarily. The principle of prudence must be adhered to by banks in order to maintain customer trust.

"So, don't think that we are lazy to give up credit, but releasing credit is an art. It must be at the right time, at the time needed by people who can manage it well,” said Jahja in a recent discussion.

Jahja revealed this when he was asked about the loan to deposit ratio (LDR), which reached its lowest level of 60.5 percent in the first quarter of 2022. As a context, the ideal LDR for banks is in the range of 78 percent – 92 percent.

"Because if you just take off credit, oh , it's easy. We want the LDR to increase to 85 percent easily. But, yes it is, the quality. That's what we always take care of," he continued.

Jahja thinks maintaining credit quality is not easy. Reflected when the Indonesian economy is on a negative path. The cause of the loss was due to the large provision of credit, but then it fell down due to the pandemic. "That's why we have to be careful releasing credit."

For the record, the issuer bank with the stock code BBCA managed to record credit growth in early 2022. As of the first quarter of 2022, BCA's credit distribution reached Rp637.1 trillion, up 8.6 percent year-on-year (yoy).

Jahja said credit growth is in line with the national economic recovery. As a result, credit growth occurred in all segments, including business and consumer loans.

BCA's corporate loans recorded an increase of 9.2 percent yoy to reach Rp. 286.9 trillion as of March 2022. This loan is the main support for BCA's total loan growth. Along with good business activity, commercial and SME loans also rose 8.2 percent yoy to IDR 188.8 trillion.

Meanwhile, the highest credit growth was recorded in the mortgage segment, which grew 9.8 percent yoy to Rp 98.2 trillion. BCA's motor vehicle loan (KKB) rebounded to Rp41.6 trillion, up 3.6 percent during January-March 2022.

Meanwhile, the outstanding balance of credit cards grew 4.9 percent yoy to IDR 12.0 trillion. Meanwhile, the total consumer loan portfolio reached Rp154.8 trillion, up 7.6 percent yoy.