• Sectoral Review

    • sectoral review
    • sectoral review
      • February-2022: Outlook in 2022: Cautious Growth Along with The Economic Recovery Trajectory
        We view the outlook for the multifinance industry to remain stable over the short and medium-term, highlighted by the expectation of positive growth of 2% - 3% in 2022, continuing an improving growth trend in financing in spite of the challenging environment. As of 2021, the industry’s net service assets (NSA) were recorded at IDR500.0 trillion, contracting by 1.0% YoY compared to IDR504.9 trillion as of 2020. In spite of the contraction, we expect the industry’s NSA to recover in 2022 as aligned with the economic recovery, as reflected in the increasing NSA of IDR506.7 trillion as of 1M2022, a positive growth of 1.2% YoY compared to IDR500.6 trillion as of 1M2021. However, the high portion of restructured financing receivables is still a hindrance to future business expansion, as recorded at IDR219.0 trillion as of 2021 (44% of total NSA), still slightly increasing from IDR214.1 trillion in 2020 (42.7%) in spite of flattening curve. Such condition may also put additional pressure on asset quality. More detail ...
      • December-2021: Working Smart to Revive the Tourism Sector
        We are of the view that the outlook for the tourism sector will continue to remain negative over the short to medium term. The resurgence of the Covid-19 variants, such as the delta and omicron, adds another layer of uncertainty about the pandemic and its effects on the sector and its recovery prospects, in our view. Therefore, we believe government support will be pivotal for the sector to survive during the pandemic, and to recover post the pandemic. More detail ...
      • October-2021: Accompanying Better Growth Prospects by Improving Profitability
        We are of the view that the outlook for the life insurance industry remains stable in the medium term. We expect growth prospects for life insurance gross premium to improve as in line with the domestic economy recovery as improvement of people’s purchasing power and business conditions translate into higher household spending on life insurance products. Increasing awareness of the public to have life insurance coverage in the midst of the Covid-19 pandemic is another factor that should support demand growth. Furthermore, long-term growth remains promising given the low penetration and density, which should increase through wider use of digital channels and improvement in financial literacy. However, the life insurance industry still faces significant challenges to improve its overall profitability, where investment and underwriting issues as well as stagnant premium growth contributed to underwhelming bottom-line performance. In addition, the fragmented market also shows that there are a number of players who still need to raise capital to increase their capacity to absorb risks and compete with the big players in the industry. More detail ...
      • August-2021: Keeping High Growth Pace Amid a Pandemic
        We are of the view that the prospect for the pharmaceutical industry to remain prospective in the near to medium term. Demand for pharmaceutical products should remain robust, especially those related to handle the Covid-19 pandemic, despite the weakening purchasing power and supply chain disruptions due to mobility restrictions. The pandemic has spurred the growing awareness of health, encouraging people to access more pharmaceutical products, such as multivitamins and other supplements. Long-term growth is also prospective, given the favorable demographic profile, easier access to healthcare facilities, and better digital health ecosystem. However, the high dependence on imported raw materials will remain a challenge in this industry due to its vulnerability to logistic disruptions and fluctuation of exchange rate. Regarding the competitive landscape, the local pharmaceutical industry is highly fragmented with numerous players, especially in the downstream segment. However, we expect domestic companies to remain dominant, while deregulation of foreign ownership may threaten the existing players. More detail ...
      • June-2021: Maintaining Business Continuity Amid Pressure
        We are of the view that the banking growth prospect will remain relatively weak in the short term. Loan growth fell into the negative territory, the first time in a decade. Demand for loans remains timid in line with the slow pace of the economic recovery, and banks will continue to exercise caution in extending loans to maintain credit quality. Profitability will remain under pressure, especially due to the modest performance of their core business. Although the net interest margin ratio has remained relatively stable, this is mainly accounted for by the increase in income from the non-core business, as banks’ credit quality continues to be under intense pressure, as reflected in the NPL ratio. We view that the solution to this situation requires a more extensive reserve policy. The subdued demand has resulted in the accumulation of liquidity in the banking industry, as reflected in a drop of the loan-to-deposit ratio, as is the case of the short-term interest rates on the interbank market. However, we see positive progress in banks’ capital, with the capital adequacy ratio maintained at a relatively high level compared to that of the minimum requirement. In addition, small banks have also raised their core capital to above IDR1 trillion through various corporate actions. More detail ...
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