KONTAN.CO.ID - JAKARTA. The Financial Services Authority (OJK) recorded an increase in the ratio of non-performing loans or Gross Non-Performing Financing (NPF) to multifinance companies in June 2023. OJK noted that the gross NPF of financing companies edged up 0.35% year to date (ytd) to 2. 67% in June 2023.

Chairman of the Indonesian Financial Services Association (APPI) Suwandi Wiratno said that many factors contributed to the increase in multifinance NPF, one of which was ahead of the democratic party which caused sales to decline.

"Because there is a democratic party that delays investment, delays possibly buying a vehicle," he said when contacted by Kontan.co.id, Wednesday (9/8).

Kelvin explained that the increase in NPF made financing companies inevitably have to increase reserves, to avoid the worst possibility.

"So, if we talk about the NPF that has been reported, this is the gross NPF. If the net already contains elements related to the provision, which is still below 1%," he explained.

Kelvin said that his party hopes that debtors who are late paying can be restructured so that the ratio of bad loans can return to the position of 2.3% to 2.4%.

"That is our hope from the association, of course it returns to the respective industry players how they can make improvements," he said.

Automatically, continued Kelvin, finance companies will increase reserves, so that the NPF remains stable. However, this step will also reduce the company's profits.

"I'm sure all finance companies will continue to record profits and there has been an increase in most finance companies recording better profits compared to 2022," he said.

Chief Executive for Supervision of Insurance, Underwriting and Pension Funds of OJK Ogi Prastomiyono said that there was indeed an increase in credit risk in the financing industry, but this was still quite under control.

"Financing companies have also formed sufficient reserves in order to mitigate credit risk, reflected in the total coverage of CKPN compared to total non-performing financing receivables of 213.26%," Ogi said last week.

Ogi said that the OJK always urges finance companies in prudential meetings to always extend credit by taking into account the principles of prudence, risk management and good governance.