Weeks after Armand Wahyudi Hartono became the vice president director of Indonesia’s largest non-state bank, he noticed how staff were leaving half-empty glasses of water after work. The next morning, he restricted the amount of drinking water available at PT Bank Central Asia’s headquarters.

Such stringent cost control is just an example of how the lender has managed to pare expenses and boost efficiency, wooing investors along the way. They’ve rewarded the company since it went public in 2000, pushing its stock up every year but one -- 2008, when the global financial crisis hit. Now BCA is the most expensive among the world’s lenders with a valuation exceeding $50 billion. And yet, investors are still willing to buy it.

“The high valuation of BCA is warranted as the company is a good defensive holding, especially in times of volatility,” said Bharat Joshi, Jakarta-based investment director for Aberdeen Standard Investment Indonesia, which owns more than 170 million BCA shares. “We like the bank for many reasons, but among all is its strong management capabilities and proven track record.”

BCA is benefiting from a growing middle class in Indonesia, Southeast Asia’s biggest economy. The nation of more than 260 million people is forecast to expand at its fastest pace in seven years in 2020, even as the growth outlook sours abroad. And thanks to a push to boost the banking industry, money circulating electronically almost tripled since President Joko Widodo ordered in 2017 e-payment be used for toll roads, Bank Indonesia data show.

“Indonesians are getting richer at a much faster pace than what the headline suggests, and they are also getting smarter and they save more money,” according to Taye Shim, director of capital markets at PT Mirae Asset Sekuritas Indonesia. “The country’s underbanked profile will continue to promise steady growth over the longer horizon, and BCA is the kind of bank that is preferred by the smarter and richer Indonesians.”

The focus on reining in costs has been central to BCA’s strategy. In addition to water limits, it’s imposed internet quota for all of its staff -- even senior employees are subject to the restrictions. And meeting rooms don’t come for free: Departments have to pay to use them.

At 63%, BCA has the lowest operating-expense ratio of the the nation’s biggest traded banks, data compiled by Bloomberg show. It offers one of the world’s widest operating margins among the largest lenders, and its profits have risen by more than 10% every year but two in the past decade.

Record Quarterly Profit
The lender reported on Tuesday a net income of 8.1 trillion rupiah ($580 million) for the three months ended Sept. 30, its highest quarterly profit according to data compiled by Bloomberg.

BCA is also known for keeping a healthy debt level: Its gross non-performing loan ratio of 1.6% in the first nine months of the year was well below the industry’s 2.5%. President Director Jahja Setiaatmadja said this month he expects the bank to achieve its loan-growth target of as much as 11% for this year.

A media representative at the lender wasn’t able to immediately comment on the story.

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