BCA's Share Buyback Plan: A Strategic Opportunity for Value Investors

Bank Central Asia (BCA), Indonesia's largest bank by market capitalization, has launched a dual-pronged share buyback strategy in 2025, allocating Rp 1 trillion (approximately $61 million) for repurchases between March and June and a larger Rp 5 trillion ($306 million) program from October to January 2026. These initiatives, priced at a maximum of Rp 9,200 per share, aim to stabilize a declining stock price while ensuring a minimum 7.5% free float to maintain market liquidity, according to a Jakarta Globe report. For value investors, this represents a compelling case study in capital structure optimization and shareholder value creation.

Capital Structure Optimization: Balancing Leverage and Stability

BCA's debt-to-equity ratio, a critical metric for assessing financial risk, has historically averaged 1.5% from 2020 to 2024, according to Finbox data. However, as of June 2025, conflicting data emerged: one source calculated a ratio of 4.75 based on total liabilities (Rp 1.24 trillion) and equity (Rp 261.6 billion) in a MarketScreener report, while another reported a Q3 2025 ratio of 1.42, according to Investing.com ratios. This discrepancy likely reflects differences in accounting methods (e.g., book value vs. market value) or reporting periods. Regardless, BCA's leverage remains conservative compared to the industry median of 0.58 for banks, according to Finbox, suggesting ample capacity to fund buybacks without overexposing the balance sheet.

Share buybacks inherently alter capital structure by reducing equity through share repurchases. For BCA, this strategy aligns with its low-debt profile, allowing it to deploy excess capital-generated from robust net income of Rp 56.98 trillion in the last 12 months-according to StockAnalysis statistics-to reward shareholders rather than accumulate idle cash. By retiring shares, BCA reduces its equity base, which, if net income remains stable, should elevate return on equity (ROE). With a current ROE of 21.8% (StockAnalysis), the bank is already a standout performer; further ROE gains could enhance its appeal to income-focused investors.

Shareholder Value Creation: EPS Growth and Signaling Effects

The most direct impact of buybacks is on earnings per share (EPS). By reducing the number of outstanding shares, BCA can increase EPS without boosting net income. For instance, its EPS grew from $0.02568 in 2023 to $0.02766 in 2024, per Finbox, and Q2 2025 saw a jump to IDR120.68, as reported by the Jakarta Globe. While no direct data links past buybacks to these gains, the mechanism is well-established: if BCA repurchases 20% of its shares (as permitted under the Rp 5 trillion plan), EPS would rise by approximately 25%, assuming no change in net income. This math alone makes the buyback a potent tool for value creation.

Beyond EPS, buybacks also send a strong signal to the market. By committing to repurchase shares at Rp 9,200-a price below its historical TTM EPS of IDR461.83, per StockAnalysis-BCA is effectively stating that its stock is undervalued. This confidence can stabilize investor sentiment, particularly in a volatile market. Notably, the company prohibited employee trading during the March–June buyback period, as noted by MarketScreener, a move that reinforces transparency and mitigates insider trading risks, further bolstering trust.

Risks and Considerations

Critics may argue that buybacks could divert capital from growth initiatives or dividend payouts. However, BCA's conservative leverage and strong cash flow (Rp 29.02 trillion in H1 2025 net profit, per MarketScreener) suggest the bank is prioritizing shareholder returns without compromising operational flexibility. Additionally, the buyback price cap ensures that management does not overpay in a downturn, a risk that has plagued some corporate repurchase programs.

Conclusion: A Win for Value Investors

BCA's 2025 buyback plan is a masterclass in capital allocation. By leveraging its low-debt structure to repurchase undervalued shares, the bank is optimizing its capital base while delivering tangible EPS growth. For value investors, this strategy offers a dual benefit: near-term price stabilization and long-term value enhancement through higher ROE and earnings power. As the October–January buyback window opens, BCA's ability to execute this plan effectively will be a key determinant of its stock's trajectory in 2026.