Ayaz Ebrahim, manager of JPMorgan Asia Growth & Income (JAGI), explains why the increasing prosperity of Asia’s burgeoning middle class is set to benefit Bank Central Asia (ID:BBCA).
“As economies in developed countries show signs of slowing, there are plenty of exciting opportunities in Asia. Countries across this region have large and growing economies, accounting for roughly 40 per cent of the world’s gross domestic product. Furthermore, with 60 per cent of the world’s population – about 4.5bn people – living in Asia, the rapid rise of the middle classes is a powerful engine for growth.
“One sector that has benefited from the increasing prosperity of Asia’s expanding middle class is financials. Innovation in financial products and services has been widespread in part due to the swift economic recovery, which has been especially robust in Indonesia.
“A standout company benefiting from this positive long-term trend is Bank Central Asia. This Indonesian bank focuses on the transaction banking business, and provides credit facilities and financial solutions for the corporate, commercial, small to medium-sized enterprise and consumer segments. The bank has recently diversified by developing a suite of digital products and services for wealthier consumers in Asia. This includes vehicle financing, Sharia banking, securities, insurance products, remittances and venture capital.
“Bank Central Asia is also benefiting from the digitalisation of the Indonesian economy. The bank’s digital banking push has led to a sharp decline in customer acquisition costs, with total cost-to-income ratios falling from previous levels of 40-45 per cent, to 35-40 per cent.
Bank Central Asia continues to provide a suite of services and expertise to clients across Asia, and its ability to innovate its digital capabilities has attracted a range of new clients. So we expect its positive story of growth and innovation to continue over the long-term.”
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