Indonesia's Bank Central Asia has been named Best Asian Bank by FinanceAsia, brushing aside strong competition from across the region, bolstered by its prudent, sensible approach to risk.
The bank was announced as the cream of Asia’s domestic financial institutions at FinanceAsia’s award ceremony at the Four Seasons in Singapore on Thursday night.
“This is a great surprise,” Jahja Setiaatmadja, president director and chief executive of BCA said after the event. “This is the first time BCA has become the best bank [in these awards]. It recognised our efforts to maintain the full quality of the bank, and to remain profitable even in a difficult situation.”
FinanceAsia's Best Asian Bank award is decided by comparing all the winners of the Country Awards across a variety of metrics. Often, one bank will be strong in one area but weak in another, leading the way in terms of profit or capital ratios, but struggling in terms of non-performing loans or asset growth. That was not the case this year.
BCA beat the competition on a variety of metrics. Among our Country Award winners, it had the highest profitability on every metric we looked at — including operating profit to average assets, net interest margins and return on assets — despite also having the highest tier one ratio. It has the lowest NPL ratio in Indonesia, and a higher reserve for NPLs than any of the other award winners. In both price-to-book and price-to-earnings terms it stands out from all of its domestic rivals.
The bank's impressive performance was largely down to its sensible approach to risk. BCA executives have earned a reputation for being discerning: choosing the best clients and the best projects, and largely avoiding highly-competitive - and as a result unprofitable - deals that state-owned banks often join as a matter of course.
This is an approach that BCA is planning to stick to in the future, according to Setiaatmadja. It is hard to blame him. BCA’s prudent approach to lending has already paid dividends. It looks likely to serve the bank well in the future.