Bank Central Asia (BCA) enters 2026 from a position of relative strength. Its full year (FY) 2025 results show net profit of IDR 57.5 trillion (about $3.6 billion), return on equity of 23.3%, a cost-to-income ratio of 30.7% and a current and savings account (CASA)-to-total-funding ratio of 84.6%. These are not incremental improvements but reinforce a model that has remained structurally consistent over time, built on low-cost funding, high transaction intensity and disciplined cost control. This positioning becomes more meaningful when set against the broader Indonesian banking landscape. Bank Mandiri reported IDR 56.3 trillion (about $3.5 billion) in net profit with a 68.0% CASA ratio and 20.3% return on equity, while BNI recorded IDR 20.04 trillion (about $1.25 billion) with a 69.7% CASA ratio. BRI delivered approximately IDR 57.13 trillion (about $3.6 billion) in net profit, comparable to BCA on earnings scale but driven by a fundamentally different engine centred on microfinance and mass-market lending. The comparison highlights that while headline profitability may converge, the underlying economics remain distinct. Hendra Lembong was appointed president director or chief executive of BCA a year ago in March 2025, succeeding Jahja Setiaatmadja who has become president commissioner or chairman of the board. He emphasised that the more relevant issue now is not performance itself, but how that performance is interpreted and valued, noting that BCA’s operating fundamentals remain intact, but that the environment in which the bank operates has become more complex, shaped increasingly by capital flows, investor positioning and external risks. In that context, strong financial results do not necessarily translate into corresponding valuation outcomes. He set out a clear hierarchy of priorities that defines the bank’s next phase of execution. These include technology and productivity, ecosystem expansion, improving the contribution of subsidiaries, defending the domestic retail franchise and upgrading customer experience. The emphasis is operational rather than thematic, reflecting where management sees both pressure and opportunity emerging in the current environment. BCA is building on its existing strengths to deepen its role in transaction banking, expand selectively into wholesale and ecosystem services, and improve productivity through technology. At the same time, it remains cautious on inorganic growth, measured on digital banking economics and realistic about the constraints imposed by regulation, market structure and capital markets. The result is a strategy that extends the existing model rather than replaces it. Results, funding strength and the logic of BCA’s advantage BCA’s FY2025 results set the baseline. The bank generated net profit of IDR 57.5 trillion (about $3.6 billion), supported by loans of approximately IDR 993 trillion (about $62 billion) and total third-party funds of IDR 1,249 trillion (about $78 billion). CASA balances stood at about IDR 1,045 trillion (about $65 billion), maintaining one of the strongest low-cost funding positions in the region. The comparison with peers highlights the difference in structure rather than scale. Bank Mandiri delivered similar earnings off a larger balance sheet and a lower CASA ratio of 68.0%. BNI, with a 69.7% CASA ratio, continues to improve but remains structurally behind on funding quality. BRI’s earnings are comparable in size but are driven by its microfinance franchise, with a very different risk-return profile. These are not variations of the same model but fundamentally different engines of profitability. Lembong said that the key is not how much profit is generated, but how it is generated. He pointed to return on assets as the more relevant measure, noting that BCA continues to produce stronger returns relative to its asset base. This reflects a combination of funding mix, transaction flows and cost discipline rather than balance sheet expansion. He also said that competition among the largest banks has become more effective. Improvements in execution, particularly in funding and transaction capabilities, have narrowed visible gaps. However, he noted that the shift has largely come from consolidation at the top, with larger banks taking share from smaller institutions rather than materially displacing BCA. The implication is clear. BCA’s position does not depend on outgrowing peers in size, but on maintaining the structure that underpins its returns. As long as its funding mix, transaction intensity and cost discipline remain intact, the bank can sustain performance even in a more competitive and concentrated market. Capital markets, foreign flows and the valuation disconnect One of the clearest distinctions Lembong drew is between operating performance and market valuation. He said that BCA’s fundamentals remain strong, but equity market outcomes are increasingly shaped by external factors, particularly foreign investor positioning and global risk sentiment towards Indonesia. This divergence is now more pronounced in 2026. BCA and the largest Indonesian banks continue to deliver strong earnings and returns, yet market performance has been weaker than fundamentals would suggest. Lembong said this reflects how investors are assessing Indonesia as a market rather than evaluating individual banks on their operating strength. He pointed specifically to capital market structure and foreign flows. Foreign institutional investors remain dominant enough that sustained selling cannot easily be absorbed domestically. This creates a situation where valuation is driven less by bank-specific execution and more by global portfolio allocation, currency expectations and emerging-market risk appetite. One of the most significant external factors shaping this dynamic has been the actions of MSCI (Morgan Stanley Capital International), the global index provider whose benchmarks influence trillions of dollars of institutional capital. In January 2026, MSCI raised concerns over Indonesia’s market accessibility, citing issues around free float, ownership transparency and price formation, and froze index adjustments for Indonesian equities pending further review. More importantly, MSCI indicated that Indonesia could face a reclassification from emerging market to frontier market status if these structural issues are not addressed. The implications are material. A downgrade would trigger automatic rebalancing by index-tracking funds and could lead to estimated foreign outflows of up to about $7.8 billion, while even the risk of reclassification has already affected investor positioning and liquidity. At the same time, global conditions have become more volatile. The escalation of the Iran conflict has pushed oil prices higher, tightened financial conditions and reinforced a broader risk-off environment across global markets. For emerging markets, including Indonesia, this has translated into weaker capital inflows, currency pressure and more defensive investor behaviour. Lembong said that these external pressures explain why strong banking performance does not immediately translate into stronger valuations. In his framing, the issue is not the underlying institution but the broader market environment in which it is assessed, where macro sentiment can outweigh bank-specific execution in the short term. He also said that improving capital market depth, credibility and investor confidence remains critical for Indonesia. This includes addressing structural issues around liquidity, transparency and policy consistency. Until those improve, bank valuations are likely to remain sensitive to global developments, regardless of domestic operating strength. The implication for BCA is that management must operate on two fronts. Execution must remain consistent, but the bank must also position itself within a more volatile global narrative. In this environment, valuation is not simply a function of earnings, but of how Indonesia’s broader market story is interpreted under shifting global conditions. Cross-border flows, Batam and the real-economy links behind branch growth The discussion becomes more grounded when it shifts from macro conditions to specific operating locations. Batam is one such example. Lembong described it as strategically important because it sits directly within the economic orbit of Singapore and captures both investment and consumer flows that translate into banking activity. The relevance is not conceptual but operational, with visible implications for branch performance, asset growth and transaction volumes. He said that BCA’s branch network is internally tiered according to business scale and potential. The bank operates about 1,264 branches nationwide, with a subset designated as higher-tier main branches. In Batam, one branch was upgraded to a higher classification after sustained growth in business volumes and assets. The upgrade reflects not just internal assessment, but the underlying strength of economic activity in that corridor. The flows supporting that growth are diverse. Lembong pointed to Singapore-linked investment, supply chain activity and cross-border commercial relationships as key drivers. At the same time, consumer flows have become increasingly important. Batam benefits from proximity to Singapore, relatively lower prices and shorter travel times compared to alternative routes. He said that this combination has led to rising business activity, stronger deposit accumulation and higher transaction volumes within the local banking system. He also said that Singapore remains Indonesia’s largest recorded source of foreign direct investment, but that this should be understood more broadly. Singapore acts as a regional financial hub through which capital from multiple jurisdictions is channelled into Indonesia. This makes corridors such as Batam not just bilateral links, but entry points for wider regional and global capital flows. This linkage between real economy activity and capital flows is also shaping how BCA approaches investor engagement. Lembong said that he plans to conduct investor roadshows in Europe and the United States, aimed at addressing foreign investor concerns directly and explaining Indonesia’s economic and banking fundamentals. The intent is to narrow the gap between operating performance and market perception by engaging the investors who ultimately influence capital allocation. He noted that this effort has become more important in the current environment, where foreign outflows have weighed on valuations despite strong underlying results. While domestic investors continue to participate, he said that the scale of foreign capital means that shifts in global positioning can still dominate market direction. The roadshows are therefore not promotional, but corrective, aimed at re-establishing confidence in both Indonesia’s macro story and the positioning of its leading banks. The broader point is that cross-border activity should not be viewed narrowly as trade or investment statistics. It shapes how branches grow, how deposits accumulate and how transaction banking evolves. In BCA’s case, the strategy is to anchor itself in domestic nodes where regional capital and economic activity land, while at the same time engaging global investors to ensure that these underlying flows are properly understood and reflected in market valuations. Building wholesale capabilities on a retail and transaction base BCA’s deepening of its wholesale banking business is not framed as a shift in identity, but as an extension of its existing strengths. Lembong said that the bank’s long-standing dominance in retail banking and payments provides a natural foundation for building a more comprehensive transaction banking and corporate franchise. The emphasis is not on replacing the core, but on deepening relationships by capturing a larger share of client flows. He said that the scale of BCA’s customer base is central to this strategy. The bank serves about 34 million customers, generating a high volume of daily transactions across payments, collections and account activity. This transaction intensity is what allows BCA to extend into wholesale banking from a position of strength, because corporate relationships are often built on the same underlying payment and liquidity flows. Lembong acknowledged that BCA’s wholesale capabilities were previously less developed relative to its retail strength. The gap was not in client access, but in product depth. Corporate clients were already connected to BCA through payroll, collections and operating accounts, but the bank lacked the full suite of tools needed to capture a larger share of treasury and transaction banking activity. The response has been to build out capabilities that sit on top of this existing flow base. He said that BCA has been developing a more integrated transaction banking platform that brings together payments, collections and treasury-related functions into a single operating environment. For small and medium-sized enterprise (SME) clients, this extends beyond basic banking into a broader operating toolkit, allowing them to manage cash flow and financial processes without relying on external enterprise systems. The objective is to embed the bank more deeply into the day-to-day operations of its clients. For larger corporates, the emphasis is on connectivity and responsiveness. Lembong said that BCA has enhanced its corporate banking interface with application programming interface capabilities, enabling integration with client systems and supporting more complex treasury requirements. This is particularly relevant for multinational clients that require consistent connectivity across markets and systems. He illustrated this with a practical example. BCA has enhanced its ability to generate bank statements seven days a week, even when there are no account movements. This addresses the needs of regional and global treasury centres that operate outside Indonesian working hours and require continuous reporting for reconciliation purposes. These types of improvements, while operational, are critical in positioning the bank as a credible transaction banking partner. The scale of operations also shapes how the bank approaches productivity. Lembong said that BCA handles a large volume of customer interactions through its contact centre, supported by about 4,000 staff. He noted that only around 10% of calls relate to complaints, while the majority are information or service requests. This distribution creates an opportunity to automate routine interactions and redeploy human capacity towards higher-value activities such as sales and relationship management, which in turn supports the bank’s expansion into wealth, insurance and corporate services. He also pointed to the broader ecosystem around the bank. While BCA directly employs about 26,000 staff, he said that approximately 92,000 people receive a paycheck linked to BCA’s operations, including outsourced and ecosystem roles. This reflects the extent to which the bank’s platform extends beyond its balance sheet into a wider operating network, reinforcing its role as a central node in Indonesia’s financial system. This push into wholesale banking is also taking place within a changing competitive landscape. Lembong said that several Western banks have reduced or exited certain businesses in Indonesia, particularly in areas where returns are lower or scale is limited. At the same time, Asian banks continue to invest, with a longer-term orientation and a stronger focus on relationship banking. He said that BCA increasingly sees its competitors across Asia rather than in Europe or the United States. The implication is that BCA’s wholesale strategy is being built on scale, flow and integration. Rather than competing on global network reach, the bank is leveraging its domestic transaction base, customer franchise and ecosystem to move further up the value chain. The objective is not just to serve clients, but to become embedded in how they operate, positioning BCA as a central transaction banking partner within Indonesia’s evolving financial landscape. Custody, subsidiaries and selective expansion beyond the core bank A distinct theme in the discussion is where BCA is not yet dominant and how it intends to expand selectively beyond its core banking franchise. Lembong was measured in describing these areas. He did not present them as immediate drivers of earnings, but as extensions that could become more meaningful over time if executed with discipline. He said that the contribution of subsidiaries remains relatively small. Less than 5% of group profit comes from non-bank businesses, with BCA Finance being the most significant contributor among them. Insurance, brokerage and other subsidiaries are still developing and have yet to reach the scale of the core banking franchise. This reinforces the point that BCA’s earnings are still overwhelmingly anchored in its main banking operations. At the same time, he said that these areas represent clear opportunities because BCA’s market share in them is not yet dominant. The bank already has a large customer base and strong distribution capabilities, which can be leveraged to expand into adjacent financial services. The logic is not to build entirely new businesses from scratch, but to extend existing relationships into areas such as insurance, investment products and brokerage services. Custody is the clearest example of this shift. Lembong said that when he joined BCA in 2020, the bank ranked fourth to fifth place in market share, and that it has since moved up to number two. While this should be understood as his assessment rather than a formally published league table, it reflects a broader trend of BCA gaining share in a business that was previously dominated by global banks. He said that part of this shift is structural. Several international banks have reduced their presence in certain domestic service lines, particularly where returns are lower or scale is insufficient. As these institutions retrench, local banks such as BCA are able to step in and capture business, particularly in areas where domestic relationships and operational proximity matter. The custody business also fits with BCA’s broader strategy of building around transaction flows rather than balance sheet expansion alone. Custody generates fee-based income, strengthens institutional relationships and connects the bank more closely to capital markets activity. In that sense, it complements both the wholesale banking push and the effort to deepen engagement with corporate and institutional clients. Despite these opportunities, Lembong was clear that BCA does not intend to pursue growth through mergers and acquisitions. He said that inorganic expansion is disruptive to operations, costly to integrate and often misaligned with the bank’s culture and execution discipline. Unless there is a clear regulatory or shareholder-driven need, BCA prefers to grow organically. He compared this to maintaining operational rhythm, noting that acquisitions can disrupt internal processes and management focus. The bank’s preference is therefore to build capabilities internally, even if that takes longer, rather than to accelerate growth through transactions that may compromise execution. The implication is that BCA’s expansion beyond its core bank will remain selective and measured. Subsidiaries and adjacent businesses are expected to grow, but within the constraints of the bank’s overall model, which prioritises efficiency, control and consistency. This approach aligns with how BCA has historically operated: extending its franchise carefully while preserving the underlying economics that drive its performance. AI, productivity and the economics of operating efficiency The discussion on artificial intelligence (AI) is framed around operational economics rather than technology adoption. Lembong said that the starting point is not the technology itself, but the structure of the bank’s workload and where efficiency gains can realistically be achieved. He said that BCA handles a large volume of customer interactions, with 90% consisting of routine information and service requests such as balance enquiries, account access and card-related issues. This distinction determines where AI can be applied effectively. Lembong said that customers are less willing to accept automated handling when they are dissatisfied or require resolution, but are generally comfortable using automated systems for routine requests. This allows the bank to focus AI deployment on high-volume, low-complexity interactions where efficiency gains are immediate and measurable. The impact is primarily on productivity. By automating routine interactions through systems integrated with internal data, BCA can reduce the servicing load on frontline staff and redeploy capacity towards higher-value activities. Lembong said this includes areas such as sales, wealth management and insurance, where human engagement remains necessary and commercially more valuable. He said that similar gains are being realised in technology functions. Over several years, BCA expanded its IT workforce from around 800 staff to about 2,300. More recently, AI-assisted development tools have enabled the bank to increase output without further proportional increases in headcount. The benefit is not simply cost control, but higher throughput and faster execution of projects. The same pattern is emerging in legal and support functions. Lembong said that AI is being introduced to assist with drafting and documentation, reducing reliance on staff for repetitive work. Over time, this allows the bank to manage growth in workload without scaling support functions at the same pace. He was also explicit about the constraints. AI adoption is not costless, particularly where licensing models are tied to user volumes, and the benefits are often overstated. BCA’s approach is therefore selective, focusing on use cases where the economics are clear rather than pursuing broad, unstructured implementation. This is reinforced by the bank’s broader employment footprint. Lembong said that AI must therefore be deployed with an understanding of its wider impact, not simply as a tool for cost reduction. The result is a disciplined approach. AI is used to improve productivity and service efficiency, but within a framework that balances cost, operational benefit and organisational impact. Rather than positioning AI as a transformation agenda, BCA is embedding it into specific parts of its operating model where it can deliver immediate and sustainable gains. Retail defence, customer experience and the role of blu For all the discussion around wholesale banking and new capabilities, Lembong returned consistently to one core point: BCA’s domestic retail franchise remains the foundation of its business model. He said that defending this position is a primary management priority, not only because of its scale, but because it underpins the bank’s funding advantage and overall economics. He said that BCA’s strength in rupiah deposits and primary banking relationships continues to be visible in market share data. This position is actively contested. Competitors are targeting the same customer base through pricing, digital channels and service improvements. As a result, retail defence is not a passive exercise, but an ongoing effort to maintain relevance and engagement in customers’ daily financial activity. Customer experience therefore becomes a central lever. Lembong said that BCA has historically benefited from a relatively loyal and patient customer base, but that this should not be taken for granted. Improving service quality is necessary not only to retain customers, but to deepen relationships and increase share of wallet. In his view, better experience directly translates into stronger deposit retention and higher transaction activity. He pointed to practical areas where improvements can be made. One example is documentation and process design. Lembong said that not all products and services should be subject to the same level of documentation and approval requirements. A more risk-based approach would reduce friction for customers, particularly in lower-risk transactions, and improve overall usability without compromising control. This focus on simplification reflects a broader shift. Rather than relying solely on product innovation, BCA is looking at how existing services are delivered. Reducing unnecessary steps, improving turnaround times and aligning processes with customer expectations can have a more immediate impact than introducing new features. On digital banking, Lembong drew a clear distinction between BCA’s main banking platform and its separately positioned digital bank, blu. He said that blu has about two million customers, with roughly 45% to 50% overlapping with BCA’s broader customer base. There are no plans to shut it down or list it, and it continues to be part of the group’s overall strategy. The distinction is structural. Blu operates as a standalone digital bank without reliance on branch infrastructure, while BCA’s main platform integrates digital channels with its existing network. Lembong said that this allows the group to address different customer segments and usage patterns without disrupting the core franchise. At the same time, blu is not intended to replace BCA’s main business. Its role is complementary, providing a separate environment for digital engagement while the core bank continues to anchor primary relationships, deposits and transaction flows. This reflects a broader view that digital banking, on its own, does not redefine the economics of the business unless it is connected to funding and transaction intensity. The implication is that BCA’s retail strategy remains centred on its core franchise, with digital capabilities layered on top rather than treated as a separate growth engine. Defending deposits, improving customer experience and maintaining daily relevance remain the priorities, while blu serves as an additional channel to extend reach and engagement within a changing customer landscape. Wealth, sustainable finance and the limits of new revenue narratives The discussion on wealth management and sustainable finance is notable for its restraint. Lembong did not present these areas as immediate engines of growth for BCA, but as segments where the opportunity exists within clear structural limits. This contrasts with broader industry narratives that position both as major near-term revenue drivers. On wealth management, he said that the opportunity in Indonesia is fundamentally different from that in established financial centres such as Singapore and Hong Kong. The domestic market remains constrained by product availability, regulatory boundaries and investor behaviour shaped by past crises. As a result, the range of sophisticated wealth products is narrower, and client demand is more conservative. He said that affluent Indonesian clients continue to diversify internationally, maintaining assets outside the domestic system. While there is some rebalancing across jurisdictions, this does not automatically translate into a deepening of domestic wealth management activity. The implication is that wealth can grow in Indonesia, but not at the same pace or in the same form as in regional wealth hubs. This places a natural ceiling on how far banks can rely on wealth as a substitute for traditional income streams. Deposits remain important not only for lending, but as a base for cross-selling. However, the transition from deposit-led relationships to fee-driven wealth income is less straightforward in Indonesia than in markets with broader product ecosystems and more liberalised capital frameworks. Lembong’s comments on sustainable and transition finance follow a similar line. He said that BCA is active in this space and, in some areas, is doing more than many peers. However, he also indicated that much of the activity is driven by regulatory expectations and investor requirements rather than by immediate commercial returns. He said that for many clients, particularly in the corporate sector, sustainable finance still represents an additional layer of compliance or cost rather than a source of incremental value. While there is a financing gap and a long-term need for transition funding, the short-term economics are not yet compelling across the board. He also placed this in a broader global context. The push for transition finance is closely linked to policy direction and industrial priorities in developed markets, particularly in Europe. This creates a situation where global narratives do not always align with domestic commercial realities in markets such as Indonesia. The implication for BCA is that both wealth management and sustainable finance will develop, but within constraints set by market structure, regulation and client behaviour. They are part of the bank’s broader offering, but not central to its immediate growth strategy. This reinforces the hierarchy of priorities outlined by Lembong. Technology and productivity, ecosystem development, subsidiary execution, retail defence and customer experience take precedence because they are more directly linked to measurable outcomes. Wealth and sustainable finance remain relevant, but their contribution is likely to be gradual rather than transformative in the near term. Extending a domestic franchise in a more complex external environment BCA enters its next phase from a position of strength, but not without new constraints. Its FY2025 performance confirms that the bank’s core model remains intact: high-quality funding, strong transaction flows and disciplined cost management continue to translate into consistent profitability. In that sense, the foundation has not changed. What has changed is the environment around it. Capital market dynamics, foreign investor positioning and global uncertainty are increasingly shaping how the bank is valued. These factors sit largely outside management control, yet they influence perception and pricing in ways that operating performance alone cannot offset in the short term. Within this context, BCA’s strategy is not to pursue expansion for its own sake, but to extend selectively from its existing strengths. In wholesale banking, the bank is building on its transaction base to deepen corporate relationships. In custody and adjacent services, it is capturing opportunities created by shifts in the competitive landscape. In AI, it is focusing on productivity and operational efficiency rather than broad transformation narratives. At the same time, the bank remains anchored in its domestic franchise. The defence of rupiah deposits, the strengthening of customer experience and the continued relevance of its retail platform remain central. Digital initiatives, including blu, are positioned as extensions of this base rather than replacements for it. The underlying theme is consistency. BCA is not repositioning itself as a fundamentally different institution, but reinforcing the characteristics that have defined its performance: low-cost funding, high transaction intensity and disciplined execution. These attributes continue to differentiate the bank, even as competitors improve and the market becomes more concentrated. In a more volatile and externally influenced environment, this approach carries a clear logic. By maintaining control over what it can execute while adapting to what it cannot control, BCA positions itself to sustain performance without compromising its operating model. That balance, between extension and discipline, remains central to how the bank is navigating its next stage of growth.
