KONTAN.CO.ID - JAKARTA. Funding received by finance companies (multi) from abroad was continuously experiencing correction. Finance companies also rely more on loans from within the country than from abroad.

Based on data from the Financial Services Authority (OJK) as of April 2022, funding from abroad received by finance companies decreased to Rp. 67.4 trillion or minus 21.6% year on year (yoy) from last year's Rp. 86.02 trillion. For funding from foreign banks, the value reached Rp 47.31 trillion, or decreased by 30.97% yoy.

Chairman of the Association of Financing Companies (APPI) Suwandi Wiratno Suwandi revealed the possibility of foreign entities starting to prioritize lending related to green financing (green financing).

"This means that because at that time many foreign banks might see that financing for Indonesian companies was starting to use green energy, starting with electric cars, but they couldn't quickly become banks abroad because they have a high commitment to blue skies, so they might consolidate first, how about providing funding to Indonesia," explained Suwandi to kontan.co.id, Sunday (12/6).

It is known that funding to the mining sectors, especially coal, is gradually being reduced. In fact, this sector is still the mainstay of financing receivables booster.

"The American government has been ordered to continue to raise interest rates, if it goes up, we can borrow it later, what can we use it for? In contrast to the situation at Indonesian banks, liquidity is ample, companies should also consolidate into borrowing from within the country. , said Suwandi.

In addition, Kelvin said, finance companies are also thinking about borrowing dollars at this time.

In addition, Suwandi said that finance companies that plan to receive loans in foreign currencies, especially US dollars, are also considering whether the risk is high if the rupiah weakens and the US dollar increases if the headging costs are high.

Because the US Central Bank, the Federal Reserve (The Fed) plans to raise its benchmark interest rate. This policy of increasing interest rates was finally realized in early May 2022 by 50 basis points (bps) abroad from foreign banks, and they provide loans there is a risk of currency fluctuations which are feared that which has been stable so far, there may be movements that do not know. where to.

"The Fed's interest rate which will increase will also affect loans if the loan is domestic, of course, even if the rupiah goes up, there will be a provision from the debtor, which can only be adjusted by how much," continued Kelvin.

As is known, the funding received by the domestic multi-finance industry as of April 2022 managed to reach Rp 151.21 trillion or grew 14.1% yoy. In addition, for the portion of funding from domestic banks, the value managed to reach Rp 145.85 trillion, or grew 15.48% yoy.

According to Kelvin, domestic funding tends to be safer, more controllable because the loans are in rupiah. Meanwhile, if the dollar loan is cheap and the headging cost is stable, foreign loans can still be obtained.

"This means that whether this foreign loan will not be processed or will it not be sought by domestic financing companies? We all know that there must be such a thing as a relationship that must be maintained but the foreign loan version may not be too large, we can get it from within why should the country go abroad," added Kelvin.

Although there will be a potential increase in domestic banking interest rates which could have an impact on increasing the cost of funds, the finance industry is considered to be ready to anticipate it.

Suwandi explained that the interest rates charged by banks for multi-finance companies are usually fixed, the same as the interest on financing from multi-finance players to debtors. Therefore, if there is an increase in bank interest rates, multifinance players will usually only adjust the increase after a few months, and only apply to new debtors.

Just so you know, Bank Indonesia will make gradual adjustments to the rupiah statutory reserve requirement. The regulation on the minimum demand deposit for conventional banks will be raised again to 7.5% on July 1, 2022, and to 9% from September 1, 2022.

Meanwhile, the minimum rupiah statutory reserve requirement for Islamic commercial banks and sharia business units, which is currently 4%, has risen to 4.5% from June 1, 2022, to 6% from July 1, 2022 and to 7.5% from September 1, 2022.

One of the financing companies, PT Indomobil Finance, also admitted that funding from abroad seemed to be decreasing, possibly due to the installments of principal payments which are usually made every 3 months.

"In the last few months, foreign loans have slowed down due to the no longer using the London Inter-bank Offered Rate (LIBOR) as a benchmark for loan interest rates. Banks and debtors are looking for other instruments/benchmarks to replace them," said Indomobil Finance CEO Gunawan Effendi.

Finally, Gunawan said, it was agreed to use the Secured Overnight Financing Rate (SOFR), but a consensus is still needed between the lender and the borrower on how to determine the figure, considering that the SOFR period is different from the loan interest period.

Gunawan explained, currently there are several loan deals that will use the term SOFR because it is more similar to LIBOR. Meanwhile, Indomobil itself is processing a syndicated loan for the 12th time, currently in the form of offshore loans from foreign banks, and it is hoped that the amount will be known in July 2022.

Offshore syndicated loans are a company's source of funding strategy in addition to obtaining from the capital market in the form of bond issuance and of course support from banks in the form of bilateral loans, both short-term and long-term loans.

"We have also prepared ceiling hedging/hedging with several banks that act as SWAP Providers, because our policy is 100% foreign currency loans must be hedged so that the risk of exchange rate fluctuations and interest rates can be more controlled," said Gunawan.

President Director of Mandiri Utama Finance (MUF) Stanley Setia Atmadja also said that until now the company still relies on funding from within the country to support the financing disbursed.

"There is no funding from abroad yet. This is inseparable from MUF's funding strategy related to the joint financing scheme with the parent group (Bank Mandiri)," said Stanley.

MUF's funding strategy is focused on joint financing schemes, particularly with the parent company and group (Bank Mandiri and BSI). Currently, the joint financing scheme contributes to the funding portion of between 70%-75%. So that the funding needs for executives outside of joint financing are not too large.

"With this scheme, funding until the end of the year is safe enough to support the planned financing. Currently, execution funding commitments have been obtained to meet monthly needs of between Rp. 300 billion to Rp. 400 billion by the end of the year," explained Stanley.

PT CIMB Niaga Auto Finance (CNAF) also still relies on funding sourced from Joint financing (JF) with the parent company and bank loans.

Along with the growth of assets in CNAF and trust from banks, the value of CNAF's funding balance has increased by 205% or Rp. 3.92 trillion compared to 1.29 trillion in April 2021. In addition, the total bank loan facilities are still available until the period of April 2022. of IDR 3.03 trillion.

"This figure does not take into account new loan plans or plans to issue Bonds/SUKUK. The availability of these funding sources is in accordance with CNAF's strategy to increase assets under management as the economy improves as well as market confidence in CNAF's performance that is getting better," said CNAF President Director Ristiawan Suherman.

CNAF is optimistic that funding from joint financing (JF) and bank loans will continue to increase to support the increase in assets under management. In addition, banking liquidity is still showing a fairly high figure so that absorption for consumption financing can still be carried out. This can be seen from the new loan agreement plans with several banks.

"The funding contribution from bank loans is 46% of CNAF's total assets under management. To support this financing, CNAF requires new funding from Joint financing (JF) and bank loans. We maintain the composition of the funding at 50:50 so that the total funding from bank loans is estimated of 4T until the end of 2022.

For your information, based on OJK data as of April 2022, the total funding received by multifinance companies reached Rp 218.63 trillion. The portion is divided into 69.1% of domestic loans or around Rp. 151.21 trillion, from the portion of foreign loans of 30.9% or around Rp. 67.42 trillion, and from issuance of securities of Rp. 55.60 trillion.

The biggest dominance was still achieved by domestic bank funding of Rp. 145.85 trillion, followed by funding from foreign banks of Rp. 47.3 trillion. The rest, from non-bank financial institutions and other institutional funding, both domestic and foreign.