BFIN Is a Rising Cure Rate Measuring Recovery, or Just an Expiry Date?

The Cure Rate Went Up. So Did the Bad Loans.

Q4 2020's post closed on a genuinely good number: 84.2% of BFI's Covid-restructured loans had returned to normal payment, the first hard cure-rate figure this backlog had seen after three straight quarters of asking for one. Q1 2021's presentation reports the number climbed further - 92% of restructured loans have now returned to normal installment payment, with 1% still inside an active grace period and the remaining 6.5% granted a second restructuring "with very strict review." Read alone, that's a company finishing what it started: a shrinking, aging restructured book converting back to performing status.

Read next to the rest of the same presentation, it's more complicated. The NPF ratio rose from 1.72% to 2.26% in the same quarter - a 54-basis-point jump, +31% relative - and the presentation's own explanation is blunt about why: "Loan restructuring has ended for 92% of restructured loans with some customers unable to fulfill their normal loan commitments." That single sentence is doing more work than its placement in the "Growth" section of the deck suggests. It says the same population being counted as "returned to normal payment" includes borrowers who, once relief actually ended, couldn't keep paying - which means the 92% cure rate isn't measuring successful recovery so much as it's measuring how many restructured accounts have exited their relief period, full stop. Some fraction of that 92% didn't cure; they just ran out of grace period and immediately became delinquent, which is exactly what shows up as the NPF increase.

This doesn't overturn the Q4 post's read that BFI's restructuring program broadly worked - the restructured balance kept falling in absolute terms (see Update on Loan Restructuring below), and NPF at 2.26% is still far better than the pandemic's worst readings. But it does mean the cure-rate figure needs a harder look than "84.2%, then 92%, line going the right direction" - a rising cure rate that arrives alongside a rising NPF ratio is the two metrics telling the same story from opposite ends: the restructured book is finishing its wind-down, and a real (if modest) share of what's coming out the other end isn't performing.

The Prescription

Report the cure rate and the NPF delta from cured accounts specifically, not just the aggregate cure percentage. BFI now has two full quarters of a disclosed cure rate (84.2%, then 92%) - the next step that would actually make the metric useful is breaking out what happens to the accounts that "returned to normal payment": how many of them are still current three, six months later, versus how many re-delinquent shortly after exiting relief. Without that, "cure rate" risks becoming a label for "restructuring period has lapsed," which this quarter's own NPF move suggests is at least partly what's happening.

What it should stop doing: letting a rising cure rate sit in the same "Growth" bullet list as booking and receivables trends, without directly reconciling it against the NPF line two bullets below in the same deck. The presentation already contains the honest sentence - "some customers unable to fulfill their normal loan commitments" - the company should put that sentence next to the cure-rate figure itself, not bury the connection in a NPF bullet a reader has to cross-reference manually.

Key Financial Metrics

Three months ended 31 March 2021 vs. three months ended 31 March 2020

FX: Rp14,606 = USD 1 (31 March 2021 month-end rate). Both periods below are converted at this same rate for comparability, following the convention used throughout this backlog - it is not a historical rate for the 2020 column.

Metric	Q1 2021 (IDR)	Q1 2021 (USD)	Q1 2020 (IDR)	YoY
Total Income ("Net Revenue" equivalent)	Rp990,848M	~$67.8M	Rp1,374,609M	⚠️ -27.9%
Profit Before Tax ("Operating Income" equivalent)	Rp282,758M	~$19.4M	Rp414,476M	⚠️ -31.8%
Net Income	Rp229,535M	~$15.7M	Rp327,858M	⚠️ -30.0%
Total Cash and Cash Equivalents	Rp611,125M	~$41.8M	n/a (see note)	-

Profit before tax remains the closest operating-income equivalent for this lender, as established throughout this backlog. The Q1 2021 presentation (dated 26 April 2021) is the source for the management-commentary content below; the financial-statement analysis draws on the company's unaudited consolidated interim financial statements for the three months ended 31 March 2021, with comparative figures for 31 December 2020 and the three months ended 31 March 2020.

The -27.9% YoY drop in Total Income is a base-effect story as much as a current-quarter one: Q1 2020's Rp1,374,609M still reflected the pre-pandemic booking pace (Q1 2020 new financing of Rp4,043 billion, more than 90% larger than Q1 2021's Rp2,937 billion), so this quarter is being measured against a comparative period that hadn't yet felt Covid-19's booking freeze. Operating cash flow's swing to +Rp618,898M is the standout figure and continues FY2020's pattern of collections running well ahead of new disbursements - Rp4,126,000M collected from financing transactions outpaced the much-reduced Rp2,937,229M disbursed for new financing.

Balance sheet metric	31 Mar 2021 (IDR)	31 Mar 2021 (USD)	31 Dec 2020 (IDR)	Change
Total Assets	Rp14,178,187M	~$970.7M	Rp15,200,531M	⚠️ -6.7%
Financing Receivables (gross)	Rp16,712,831M	~$1,144.1M	Rp17,050,711M	⚠️ -2.0%
Total Liabilities	Rp7,310,601M	~$500.5M	Rp8,594,377M	✅ -14.9%
Fund Borrowings (net)	Rp4,432,870M	~$303.5M	Rp4,794,844M	✅ -7.6%
Securities Issued (bonds, net)	Rp2,013,916M	~$137.9M	Rp2,978,631M	✅ -32.4%
Total Equity	Rp6,867,586M	~$470.2M	Rp6,606,154M	✅ +4.0%

Debt-to-equity, on the same gross basis used throughout this backlog (fund borrowings plus securities issued, both net of unamortized costs, against equity), fell further to ~0.94x from December 2020's ~1.18x - the fifth straight quarter of deleveraging - as the entire Rp966,000M "Tahap IV Tahun 2018" bond tranche was repaid in full during the quarter, the single largest driver of the securities-issued decline. The related-party working-capital facility from PT United Tractors Tbk - flagged since Q1 2020 - continued amortizing on its unchanged 4 March 2023 maturity, down to Rp452,421M from Rp499,062M three months earlier; see Beyond the Usual below for a new BCA facility disclosure that quietly resolves a mismatch flagged in the prior post.

Key Operational Metrics

• New financing originations: Rp2,937 billion for Q1 2021, up 35.3% QoQ from Q4's Rp2,172 billion but down 27.4% YoY from Q1 2020's pre-pandemic-paced Rp4,043 billion - the third consecutive quarter of booking recovery, continuing Q3 2020's restart and Q4's further pickup.
• Managed receivables (including off-balance-sheet joint financing, per the deck): Rp13,647 billion, down 2.1% QoQ from Q4's Rp13,947 billion and down 26.8% YoY - though management flags March 2021 as the first month of receivables growth since the pandemic hit, a genuine inflection point if it holds.
• Non-Performing Financing (NPF) (company's own disclosed figure^», calculated on total managed receivables including off-balance-sheet joint financing): 2.26% at Q1 2021, up from 1.72% at Q4 2020 - the first quarterly worsening in this ratio since the pandemic-era peak, and directly connected to the cure-rate mechanics discussed above (see The Cure Rate Went Up. So Did the Bad Loans.).
• Receivables overdue more than 90 days (calculated from the filed statement's own overdue-day disclosure, on-balance-sheet gross financing receivables only - the narrower convention used throughout this backlog): 1.84% of gross financing receivables (Rp306,912M of Rp16,712,831M), up from 1.40% at Q4 2020 - consistent direction with the NPF move above, on the narrower on-balance-sheet base.
• Receivables 1-30 days overdue: 17.22% of gross financing receivables, actually improved from Q4's 19.59% - the early-delinquency bucket easing even as the 31-90 day bucket worsened (5.44% from 3.95%), a sign accounts are migrating deeper into delinquency rather than the front of the pipeline getting worse.
• Net Credit Loss (NCL) ratio: 2.00% for Q1 2021 (annualized), down from Q4's 4.12% and up from Q1 2020's 1.03% - management attributes the QoQ improvement partly to timing, expecting "more repossession and collateral disposal activities" - and therefore higher NCL - in coming months.
• Cost of Credit (COC): 3.12% for Q1 2021 (annualized), down from Q4's 4.78% and from Q1 2020's 4.18%.
• Loan loss reserve (LLR) and coverage: LLR held at 7.5% of receivables (company's own managed-receivables basis), up from 7.1% QoQ; coverage of non-performing loans eased to 3.3x from Q4's 4.1x, though still above Q1 2020's 3.1x - the NPF increase outpaced the reserve build this quarter.
• Debt-to-Equity Ratio (DER)^»: ~0.94x on a gross basis (see Key Financial Metrics above). The company's own "Net Gearing Ratio" fell to 0.8x from 1.0x QoQ and 1.9x YoY.
• Net Interest Spread: 11.12% for Q1 2021, down from Q4's 12.02% and from Q1 2020's 13.00%, driven by a lower proportion of higher-yielding motorcycle (NDF) portfolio.
• Cost to Income: 49.45% for Q1 2021, worse than Q4's 46.88% and Q1 2020's 44.18% - the smaller revenue base this quarter is being run against a similar absolute opex level, even after cost cuts.
• Return on average assets (ROAA, before tax): 7.73%, down from 8.57% a year earlier.
• Return on average equity (ROAE, after tax): 13.82%, down sharply from 21.17% a year earlier - the clearest single ratio showing profitability hasn't returned to pre-pandemic levels even as the balance sheet has stabilized.
• Earnings per share: Rp15 basic, down 31.8% from Rp22 in Q1 2020, on an unchanged 14,964,383,620 shares outstanding net of treasury stock.

Update on Loan Restructuring

• Restructured balance: Rp3.6 trillion as of 31 March 2021, equal to 26.5% of managed receivables (company's own denominator, consistent with the NPF convention above) - down from Q4 2020's Rp4.62 trillion (33.1%) and less than half the Aug-20 peak of Rp5.3 trillion.
• Cure rate: 92% of restructured accounts had returned to normal payment as of 31 March 2021, up from Q4's 84.2% - but see above for why this figure needs to be read alongside the NPF increase, not instead of it.
• Remaining restructured book breakdown: of the accounts still restructured, 1% remain under an active grace period and 6.5% have been granted a second restructuring, which the company says was extended "with very strict review" - a meaningfully more cautious framing than the original restructuring round, and a fair signal that BFI isn't rubber-stamping repeat relief.
• Rescheduling program formally ended in August 2020 and hasn't reopened - all restructuring activity visible this quarter is existing accounts working through relief terms already granted, not new Covid-19 restructuring volume.

Three Segments: Cars Still the Engine, Others the Swing Factor

The company reports Cars, Motorcycles, and Others on a quarterly basis, unchanged from every prior quarter in this backlog.

Cars - still the largest segment: Rp680,697M of income (68.7% of total, up from 66.1% a year earlier), with profit before tax down 27.3% to Rp193,854M from Rp266,624M. Cars carried the largest single share of this quarter's impairment provisioning (Rp85,818M of the total Rp135,036M), consistent with its size in the book.

Motorcycles - Rp184,585M of income (18.6% of total, down from 23.1%), with profit before tax down 41.5% to Rp61,018M from Rp104,255M - the sharpest percentage decline of the three segments, tracking the continued shift in booking mix away from motorcycle financing (see Asset Composition in the deck, where non-dealer 2W booking share fell from 63% to 40% of the mix YoY).

Others (heavy equipment/machinery, property, and sharia financing, plus corporate tax) - Rp125,566M of income (12.7% of total, up from 10.8%), with profit before tax down 36.0% to Rp27,886M from Rp43,597M - a much smaller swing than FY2020's dramatic reversal in this segment, since this quarter's comparative (Q1 2020) predates the APT settlement's one-off impact on Others' prior-year figures. Net of tax, Others posted Rp22,637M of net profit for the quarter (down from Rp34,486M a year earlier).

Beyond the Usual

The BCA facility mismatch flagged last quarter has quietly resolved itself in this quarter's comparative column

The Q4 2020 post flagged a mismatch: BFI's FY2020 presentation described a new "IDR 1 trillion" facility signed with PT Bank Central Asia Tbk in late 2020, but the audited financial statements' borrowings note showed only a Rp350,000 million facility maturing in 23 days. This quarter's interim financial statements' comparative (31 December 2020) column for that same facility now shows a Rp1,350,000 million facility limit maturing 14 December 2024 - a four-year tenor, not three weeks, and far closer to the deck's original "Rp1 trillion" framing. The Rp50,000 million drawn balance is unchanged between both disclosures. This is the company's own later filing restating its own earlier comparative figure, which this backlog treats as a legitimate correction rather than new information the company didn't have at the time - but it does mean the specific facility terms disclosed in the FY2020 audited statements themselves were wrong (or at minimum, materially incomplete) as originally filed, not just presented confusingly in the deck as the prior post assumed.

Fitch affirmed BFI's A+(idn) rating and revised the outlook to stable, the first outlook improvement since the pandemic began

On 10 March 2021, Fitch Ratings Indonesia affirmed BFI's credit rating at A+(idn) and revised the rating outlook to stable, citing reduced downside risk to the company's profile from Covid-19 and an expectation that financial metrics will "remain largely consistent with the current rating" over the next one to two years. This is the first rating-agency signal in this backlog that a major external party views BFI's pandemic-era risk as genuinely receding, rather than merely stabilized at a lower level - a useful counterweight to this post's own skepticism about the cure-rate/NPF relationship above, since Fitch had visibility into the same restructuring data when making the call.

Off-balance-sheet joint financing exposure kept shrinking, down another 30.8% in a single quarter

Joint financing receivables - the off-balance-sheet arrangements this backlog's footnote-mining methodology specifically tracks as a source of hidden leverage - fell to Rp178,667M (net) from Rp258,136M three months earlier, continuing FY2020's 64.4% full-year decline. PT Bank Rakyat Indonesia (Persero) Tbk remains the sole joint financing partner, still structured without recourse to BFI if a customer defaults.

A full Rp966 billion bond tranche was repaid in full this quarter, the single largest driver of the quarter's deleveraging

The "Obligasi Berkelanjutan III BFI Finance Indonesia Tahap IV Tahun 2018" tranche, with a nominal value of Rp966,000M, was repaid in full during Q1 2021 - visible in the cash flow statement as a Rp966,000M principal repayment and in the securities-issued note as the tranche simply disappearing from the outstanding schedule. This single repayment accounts for the bulk of the quarter's -32.4% drop in securities issued (see Key Financial Metrics above), and is a scheduled maturity rather than an early redemption - the bond was originally issued in 2018 on a standard multi-year tenor.

The related-party United Tractors facility kept amortizing on the same unchanged maturity, now three straight years without an extension

The working-capital facility from PT United Tractors Tbk - flagged since Q1 2020 for its repeated maturity extensions before that point - shows the same 4 March 2023 maturity date as every quarter tracked in this backlog since. The outstanding balance fell to Rp452,421M from Rp499,062M (-9.4% QoQ), continuing a straightforward amortization pattern with no sign of being rolled over, expanded, or extended again.

Management's Reading of Its Own Quarter

The 26 April 2021 presentation frames Q1 2021 as continued execution of the "prudent restart booking strategy," highlighting the QoQ booking recovery (+35.3%) and March 2021 as the first month of managed-receivables growth since the pandemic began. On asset quality, management is candid in the deck's own language about the NPF increase's cause - directly connecting it to loans exiting restructuring, as discussed above - rather than presenting the NPF move as unexplained. The deck also flags that more repossession and collateral disposal activity is expected in coming months, which management expects will push NCL higher and NPF lower simultaneously - a forecast this backlog will be able to check directly against Q2 2021's results once available. What the deck still doesn't quantify: how much of the remaining Rp3.6 trillion restructured balance management expects to eventually re-delinquent versus genuinely stabilize, beyond the qualitative "very strict review" description of the 6.5% granted a second restructuring.

Stock Price: Powering Through a Post-Vaccine Rally, Then Giving Some Back

BFI Finance shares closed at Rp655 on 31 March 2021, up 17.0% from December 2020's Rp560, but down 4.4% from February's high of Rp685 - the stock's best level since well before the pandemic. Over the two-year window (April 2019 through March 2021), the stock ranged from Rp685 (February 2021) to the March 2020 crash low of Rp240, a 65.0% peak-to-trough swing - large enough on its own to warrant this section, following the same >30-40% threshold applied throughout this backlog. The broader pattern: BFI's share price recovered its entire pandemic-era loss by December 2020 and has continued climbing into 2021, even as the fundamentals underneath it - NPF, net income, cost-to-income - are still meaningfully weaker than pre-pandemic levels, a gap this post's valuation section addresses directly below.

Target Valuation Range

Market cap ~Rp9,801,671M (~$671.1M) at ~16.2x TTM P/E and ~1.43x P/B - BFI is now priced closer to a normal-cycle multiple than a distressed one - but this quarter's NPF reversal is exactly the kind of data point that should make a buyer cautious about assuming the credit-quality recovery is linear, rather than a reason to chase the rally further.

Using 14,964,383,620 shares outstanding net of treasury stock (unchanged since December 2019) and the Rp655 closing price:

Market cap buildup	Q1 2021
Share price (period-end)	Rp655
Shares outstanding	14,964,383,620
Market capitalization	Rp9,801,671M (~$671.1M)
Book value (total equity)	Rp6,867,586M

Peer-multiple sanity check	FY2020	Q1 2021	Change
P/E (TTM)	~11.9x	~16.2x	up
P/B	~1.27x	~1.43x	up

Market cap is up 17.0% from December 2020's ~Rp8,380,055M. TTM P/E uses TTM net income of Rp603,269M (FY2020's Rp701,592M, less Q1 2020's Rp327,858M, plus Q1 2021's Rp229,535M) - a genuine trailing-four-quarter figure rather than annualizing a single quarter, which would distort the multiple given Q1's seasonally lighter booking base. The market has kept re-rating BFI upward through Q1 2021, even as this quarter's own NPF move is the first data point since the crash that credit quality isn't purely improving in a straight line. That's not a reason to call the stock overvalued outright: cost of credit and NCL both improved QoQ, the restructured book kept shrinking in absolute terms, and Fitch's stable-outlook affirmation (see Beyond the Usual above) suggests an informed external party isn't alarmed either. But a ~16x TTM multiple is being paid for a business whose ROAE (13.82%) is still well below its pre-pandemic run rate (21.17% a year earlier), priced for continued recovery rather than for the possibility that the NPF reversal is an early sign the recovery has stalled. The peer-multiple read stays the honest lens: priced for a lender whose worst is behind it, but not yet priced with the caution this quarter's NPF number arguably warrants.

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