Title:
FINANCIAL PERFORMANCE AND STOCK VALUATION OF BANK CENTRAL ASIA

Authors:
Shelena Hermin Susanti, Subiakto Sukarno, Indonesia

Abstract:

A bank has a vital role in a country. Banks can boost the economy by collecting funds from the community and channeling them back in the form of loans for working capital. This will provide a multiplier effect in the economy. Because of its important role, each country has a central bank that functions to maintain stability of the banking sector. Bank Indonesia (BI) as the central bank in Indonesia issues various regulations in carrying out its functions, including those concerning the bank healthiness. Several financial ratios related to bank health show that Bank Central Asia (BCA) as one of the largest private banks in Indonesia is included in the very healthy bank category in 2020. BCA stock is the largest market capitalization in Indonesia and its price is the highest in banking sector. BCA's Price to Book Value (PBV) ratio of 4.41 is the highest compared to other BUKU IV banks with the average of 1.79 as of April 25, 2021. BCA's Price to Earnings Ratio (PER) was also recorded as the second highest at 28.54 with the banks’ average of 23.92. BCA's stock price is overvalued by 55.63% based on PBV relative valuation and overvalued by12.87% based on PER relative valuation. But, when using the Excess Return Model as a model to perform absolute valuation, the valuation of BCA's stock price shows an undervalued price of 18.93%.