Publication

PEFINDO views the outlook for the multifinance industry to remain stable in the near to medium term, supported by a national economic growth projection in the range of 4.9%–5.2%, a declining trend in benchmark interest rates, and the continued development of the electric and hybrid vehicle ecosystem, along with government incentives. In our view, continuing government incentives for electric and hybrid vehicles will further support demand for such vehicles, creating business opportunities for growth  in the multifinance industry. However, the multifinance industry faces several significant challenges, particularly concerning weak consumer purchasing power combined with change of behaviour in purchasing new cars amid the entrants of new brands, putting  pressure on motor vehicle sales, which could lead to a decline in financing receivables for the multifinance industry. A deterioration in asset quality within the industry will likely curb growth, with a stronger focus on resolving problematic debtors. Furthermore, the downward trend in commodity prices, which is mainly due to oversupply and challenging economic conditions, in our view, may have an impact on the limited potential expansion of heavy equipment financing. Although the downward trend in interest rates  may continue in 2025, we view weak consumer purchasing power as the main challenge for the multifinance industry. With subdued purchasing power, we project that the growth of net service assets (NSA) for multifinance companies will be in the range of 6%–8% in 2025, similar to the growth of 8% recorded in 2024. ...

Indonesia’s banking industry enters 2025 with a stable financial foundation, although still being under pressure from macroeconomic conditions. Solid capital buffers and ample liquidity remain the key anchors supporting the credit profiles of the banking industry, while profitability is facing the challenges of narrowing margins and rising credit costs. Key indicators remain strong by the end of 2024: the capital adequacy ratio (CAR) stood at 26.8%, Tier-1 capital at 25.3%, the liquidity coverage ratio (LCR) at 222%, and the net stable funding ratio (NSFR) at 129%. The non-performing loan (NPL) ratio also remained relatively stable at around 2.1% of total loans. This resilience in fundamental metrics provides confidence that any cyclical disruptions are unlikely to escalate into systemic stress. As such, the industry’s overall rating outlook remains broadly stable. ...

We are of the view that the outlook for transportation infrastructure such as toll roads, airports, and railways will remain stable in the near to medium term. Previously, the demand for transportation infrastructure services was significantly disrupted by the Covid-19 pandemic amid the mobility restriction and social distancing measures, which later caused a sharp decline in the earnings of transportation infrastructure operators and substantially weakened their credit profiles, particularly during a period when many were in the midst of expanding their operational capacity. However, since 2022, the sector has experienced a rapid recovery, with demand surpassing pre-pandemic levels across most sub-sectors by 2024. This rebound has led to a marked improvement in the financial condition and credit profiles of the majority of industry players. ...