Banking stocks are in the spotlight after experiencing a decline. One of the most notable is PT Bank Central Asia Tbk (BBCA), the bank and issuer with the largest market capitalization in Indonesia.

Throughout 2025, the shares of this Djarum Group-owned bank have dropped 22.2%. The recent fall in BBCA’s share price has coincided with broader market pressures. Several analysts believe this correction indicates that BBCA’s valuation is currently at a discount despite its strong fundamentals.

According to Victoria Venny, Head of Research at MNC Sekuritas, the decline in BBCA shares is only temporary. In fact, she argues that the correction highlights BBCA’s undervaluation.

“Looking at its historical valuation, BBCA is already relatively discounted. Meanwhile, its performance in the first half of 2025 remains solid. This is merely a temporary sentiment and sector rotation. Once the market improves, BBCA’s valuation should rebound,” she explained.

In the first half of 2025, BBCA disbursed loans worth Rp959 trillion, marking a 12.9% year-on-year (yoy) growth. This loan growth even outpaced the industry average, as Bank Indonesia (BI) reported overall bank lending growth of 7.3% yoy by June 2025.

BBCA also posted growth in net profit. From January to June 2025, net profit reached Rp29 trillion, an increase of 8.0% yoy. This was supported by net interest income, which rose 7.0% yoy to Rp42.5 trillion, and non-interest income, which increased 10.6% yoy to Rp13.7 trillion.

“While some banks faced liquidity challenges, BBCA successfully maintained its daily average Loan to Deposit Ratio (LDR) at around 78.9%. This liquidity gives flexibility for expansion while still prioritizing prudence to preserve asset quality,” Venny stated.

She also emphasized BBCA’s strength in efficiency. Its Cost to Income Ratio (CIR) dropped to 29.1% in the first half of 2025 from 30.5% in the same period last year. This efficiency pushed pre-provision operating profit (PPOP) up 9.1% yoy to Rp37.6 trillion.

“Operating expenses only grew 5.3%, much lower than revenue growth. This shows management’s ability to control costs amid business expansion,” she added.

Venny further noted BBCA’s strength lies in its funding base. “Third-party funds grew steadily at 6% yoy, driven by demand deposits up 9% and savings up 6%. CASA now makes up 82.5% of total deposits, a very high level compared to industry averages. This funding structure keeps BBCA’s NIM strong and sustainable,” she explained.

She also mentioned that the increase in LDR to 78% at the end of H1-2025 is not concerning, but rather shows that the bank has greater room to expand lending without risking liquidity stability. “Strong CASA provides a buffer for NIM, while a healthier credit mix will support profit growth,” she said.

Similarly, Erni Marsella Siahaan, CFA, analyst at Ciptadana Sekuritas, highlighted that BBCA’s performance remains robust with strong margins supported by low-cost funds, an expansionary LDR, and an improving loan portfolio.

“In terms of funding, third-party deposits grew steadily by 6% yoy, driven by demand deposits (+9% yoy) and savings (+6% yoy), while time deposits fell (-1% yoy, -3% qoq). This boosted CASA ratio to 82.5% (from 82.1%). The bank’s LDR increased to 78%, supporting NIM along with asset yield improvements due to higher credit contributions compared to securities,” she wrote in her research note.

Despite BBCA’s stock price still being under pressure compared to the start of the year, Bloomberg’s analyst consensus maintains a Buy recommendation. Out of the total, 34 analysts from both local and foreign brokerages recommend buy, while only 3 suggest hold. The average target price from consensus is set at Rp10,824 per share.

Analysts also project BBCA could book a net profit of Rp58 trillion for 2025. With its first-half net profit already at Rp29 trillion, or 50% of the estimate, BBCA’s performance is considered in line with expectations.