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A Bank’s Perspective
Overview of Multifinance Companies in Indonesia
Total Asset and Number of Multifinance Companies Receivables and Non Performing Financing
IDR Tio IDR Tio; %
Sources : OJK
• The number of multifinance companies (200 companies) have remained stable over the last 6 years.
• 21 of the largest companies own 66% (IDR 271 Tio) of total market share.
• Over the same time period, total assets have grown significantly (39%) from IDR 342 Tio in 2012 to IDR 468
Tio in September 2017.
• Total assets are mainly driven by the growth in financing receivables, which grew 32% from IDR 311 Tio in
2012 to IDR 410 Tio in September 2017.
• However, Non Performing Financing (NPF) has increased significantly from 2015 to 2016 by 124% due to:
• Macroeconomic conditions
• Regulatory rule changes in classifying financing receivables.
Overview of Multifinance Companies in Indonesia
Sources : OJK
• ROE and ROA decrease in 2014 & 2015 is caused by a fall in NPBT due to macroeconomic conditions,
mainly lower commodity prices and stagnation of automotive markets.
• Receivables until 2015 were relatively equal between consumer and investment financing. However, a
drop in commodity prices have caused a drop in investment financing which consist of heavy equipment
and commercial vehicle.
• Since 2016 receivables have been dominated by consumer financing (63%) which comprises of 2 and 4
wheel vehicle financing.
Overview of Multifinance Companies in Indonesia
• Focuses on Low to Middle End segment to avoid direct competition with Banks, which
increases potential credit risk.
• Highly dependent on Bank Loans and Bonds, which increases liquidity risk exposure and
a higher cost of funds.
Funding
• Leverage significantly lower compared to banks due to higher risk business model and
regulatory restrictions on gearing ratio.
Bank Financing Scheme and Its Risks
Potential Risk
Fictive end user √ √ √
Double pledge receivables √ √ √
Asset recovery √ √ √
• Executing scheme poses higher risk for Banks due to weaker collateral (receivables) and increased
concentration risk.
• Channeling and Joint Financing schemes, although covered by the asset being financed as collateral is still
very dependent on:
• Capability and effort of asset collection
• Condition of asset upon collection
• Market demands on assets
Bank’s Point of Review
Bank Multifinance
Why? Funding √
Loan initiation √
Review √
Disbursement √
Point Of Review
Strong and reputable company is not enough, it surely needs a good end to end
process and procedure backed by reliable IT System to run the business
Loan
Process
Collection Recovery
IDR 237 Tio (63%) IDR 117 Tio (31%) IDR 25 Tio (6%)
Market Size
Shareholder &
Management
Economic Condition
Receivable
NPF Bank stop
Growth
credit
Bad character
Bad system