DBS Bank Central Asia: Hold; Rp6,800; TP Rp6,200; BBCA IJ

Commencing operation of subsidiary in two-wheeler financing

BBCA officially slated operation of PT Central Sentosa Finance (CSF), a subsidiary in two-wheeler financing this month with initial capital of Rp100bn. In the first phase, CSF would extend financing through five branches in Jakarta , Banten, Batam and Sumatra . BBCA funds CSF in the format of 25% equity participation through BCA Finance, as regulated by BI that banks could invest in a company with operation of more than two years. As a differentiation strategy, BBCA targets to charge slightly lower interest than current prevailing market rates of 26%-30% for two-wheeler financing business.