Turnaround Story

Digital transformation via J Mobile to drive funding growth and efficiencies. Supported by continued backing by J Trust Group of Japan, BCIC is repositioning itself to undergo digital transformation through the launch of J Mobile in 2024, replacing the bank’s legacy platform with a modern, feature-rich app, paving the way for enhanced competitiveness in Indonesia’s rapidly expanding digital banking market. This digital upgrade facilitates savings plans, online account openings, and deposits, strengthening customer engagement, improving convenience, and reducing reliance on physical branches. Since the launch of J Mobile, the bank has successfully attracted more low-cost funding, as reflected in its CASA ratio which rose to 20% in June 2025 (up from 15% in FY24). Additionally, improved digital infrastructure and automation are expected to drive operational efficiencies, with the bank projecting decreased cost-to-income ratio from 92% in FY24 to 78% in FY25.

Earnings growth from strategic focus on corporate & commercial segments. With credit growth stemming from working capital facilities for manufacturing, trading, and mining sectors, focusing on reputable corporates, affiliated groups, and established local conglomerates, BCIC is guiding for sub-10% loan expansion on the back of stable credit cost and expected improvement in Net Interest Margin (NIM) to ~2.5% (up from 2.2% in FY24). This marks a strategic pivot towards higher-quality borrowers and a move away from more volatile consumer lending. Earnings growth will be further supported by continued digital upgrades, enhanced transaction banking services, and ESG-linked financing, with the green loan portfolio expected to exceed 15% within the next 2–3 years (compared to 9% in 2024).

Potential higher free float & corporate actions: Spec. BUY with TP of IDR 250. On the capital market side, J Trust is committed to increasing BCIC’s free float above 7.5% in the coming months through a potential share placement, which would enhance liquidity and reduce the risk of future suspension by the stock exchange. Management has also reiterated its commitment to strengthening capital to remain competitive with private-sector peers, leaving the door open for potential corporate actions to bolster the bank’s equity base. We assign a Speculative BUY rating with a target price (TP) of IDR 270, based on 2026F PBV of 1.15x or 50% discount to the sector, supported by the bank's turnaround earnings story. This re-rating valuation target reflects potential catalysts from free float expansion, new investor entry, going digital, stabilization of core lending growth, and improving cost efficiencies. Risks: lower-than-expected NIM, additional free float delays, and macroeconomic headwinds.