Bisnis.com, JAKARTA - The Financial Services Authority (OJK) believes that this year is the right time for players in the finance industry to expand.
OJK Deputy Commissioner for Public Relations and Logistics Anto Prabowo believes the multi-finance industry will be able to optimize the momentum for economic revival and recovery from the impact of the Covid-19 pandemic.
In addition, the recovery in people's purchasing power has also rekindled the need for individuals and business actors for funding sources, including through financing. This is what brings the multi-finance industry to show a recovery trend since the end of last year.
"Receivables from finance companies are observed to be on an increasing trend, mainly driven by the type of working capital and investment financing, with the majority of sectors experiencing positive growth," said Anto in his statement, Tuesday (17/5/2022).
Based on OJK statistics, the value of multi-finance receivables as of March 2022 reached IDR 374 trillion, growing 2.7 percent year-on-year (yoy) compared to March 2021 worth IDR 364 trillion.
Director of Supervision of the OJK Financing Institution Yustianus Dapot said that the financing industry had been in a growth trend since late 2021, after previously being deeply affected by the Covid-19 pandemic.
One of the indicators of recovery, namely the level of non-performing financing (NPF), as of March 2022 has returned to the level of 2.78 percent. This value is much lower compared to the same period in 2021 when the industry's NPF was recorded at the level of 3.74 percent, and compared to February 2022 which still touched the level of 3.25 percent.
Meanwhile, the gearing ratio of finance companies was recorded at 1.94 times from the maximum limit of 10 times. The ratio of operating expenses to operating income (BOPO) returned to the level of around 80 percent, even reaching the level of around 70 percent in the last 2 months.
"Financial companies are also starting to dare to expand their business strategy this year, after being hit in previous years due to the pandemic. This can be seen from the increase in operational costs allocated by the multi-finance industry this year," he said.
In comparison, the BOPO of the financing industry, which was consistently above the 90 percent level during the pandemic, reflects the tightening of belts by industry players.
OJK data shows that the BOPO of the multi-finance industry, which was at the level of 85.06 percent in January 2022, fell to 78.48 percent in February, and 79.27 percent in March.
"This is a signal that business people are ready to step on the gas this year, after making efficiencies in the distribution of tight financing in recent years," added Dapot.
OJK predicts that all segments of the multi-finance industry will continue to improve, both multipurpose financing, working capital, and investment.
The multipurpose segment, which dominates industrial financing receivables with a portion of 54 percent of the total, is still supported by financing for new and used four-wheeled vehicles and two-wheeled vehicles.
"Vehicles are the prima donna for multipurpose financing. The increase in purchasing power and loosening of mobility will be the driving force for demand for car and motorcycle financing. In addition, the PPnBM discount factor which is a stimulus from the government is also influential," he said.
Investment financing and working capital also continued to experience an improving trend starting at the beginning of this year. According to OJK data, investment financing receivables continued to increase from Rp. 114.27 trillion in December 2021 to Rp. 118.96 trillion (January 2022), Rp. 121.85 trillion (February 2022), and Rp. 124.77 trillion (March 2022).
Meanwhile, working capital financing, which reached IDR 28.95 trillion in December 2021, moved slightly to IDR 28.71 trillion (January 2022), but rose again to IDR 30.01 trillion (February 2022) and IDR 31.05 trillion (March 2022).
According to the OJK, this is driven by the domestic economic recovery which is maintained in line with massive Covid-19 vaccinations, and the optimal application of health protocols that continue to run. In fact, despite the turmoil of external factors such as global geopolitical tensions and the normalization of global monetary policy, its transmission to the domestic economy was relatively manageable.