BFIN The Cure Rate Fell for a Third Straight Quarter - Then the Controlling Shareholder Made Its Move

A Cleaner Balance Sheet, a Softer Restructured Book

Full-year 2021 closed the way the last two quarters had been pointing: NPF^» (on the total-managed-receivables basis this backlog tracks) fell to 1.25% at year-end, down from 1.72% at FY2020, 1.97% at Q3, and 2.15% at Q2 - the fourth straight quarterly improvement in a row, and comfortably inside management's own <2.0% target for the year. NPF coverage climbed to 4.6x from Q3's 3.2x. On the headline numbers alone, this reads as the cleanest year in the backlog: the asset-quality trend Q3's post called "NPF and NCL improve together" for the first time held through Q4 as well - the Net Credit Loss (NCL) ratio, which measures loans actually charged off or repossessed rather than merely non-performing, improved to 2.10% for the quarter, from Q3's 2.70%.

But the metric that actually tracks whether restructured borrowers are recovering kept moving the wrong way for a third consecutive quarter. 83.0% of restructured loans had reverted to normal payment status as of 31 December 2021, down from 86.8% at Q3, 89.2% at Q2, and 92% at Q1 - the disclosed cure rate has now fallen every single quarter since Q1 2021. The share pushed into a second restructuring "with strict review" climbed again too, to 15.9% of the restructured pool, up from 12.9% at Q3, 10.2% at Q2, and 6.5% at Q1 - its fourth straight quarterly increase. A further 1.1% of the pool sits under an active grace period (up from Q3's 0.3%). Read against a restructured balance that kept shrinking - Rp1.5 trillion, or 10.2% of managed receivables at year-end, essentially unchanged from Q3's Rp1.5 trillion/10.2% - the picture The Prescription in Q3's post already flagged has hardened rather than resolved: the pool isn't shrinking anymore and less of what remains is curing. Rp411 billion, or 27.8% of the total restructured balance, is now provisioned against it.

Then, two weeks into the new year, the story took a turn that had nothing to do with credit quality. On 20 January 2022, Trinugraha Capital & Co SCA - BFI's own controlling shareholder - announced a voluntary tender offer to buy the remaining 57.19% of BFI's shares at Rp1,200 per share, and BFI itself disclosed it intends to sell a large part of its own treasury stock into that same offer (see Beyond the Usual below). A controlling shareholder buying more of a company right as its most closely watched credit metric keeps deteriorating is exactly the kind of juxtaposition this backlog's methodology exists to surface.

The Prescription

Publish the second-restructuring cohort's own resolution data, not just its growing share of the pool. The second-restructuring share has now risen for four straight quarters (6.5% -> 10.2% -> 12.9% -> 15.9%) while the cure rate has fallen for three (92% -> 89.2% -> 86.8% -> 83.0%). Those two lines are almost certainly the same accounts moving between categories, but BFI has never disclosed what happens to a loan after its second restructuring - what share of that cohort itself eventually cures, versus what share needs a third round, versus what share is ultimately written off. Without that, "strict review" remains a label a reader has to take on faith, exactly as Q3's post argued.

What it should stop doing: letting an improving NPF/NCL headline stand in for the restructured book's real resolution. The FY2021 presentation frames the year almost entirely around NPF's drop to 1.25% and coverage's climb to 4.6x - both genuinely good numbers - while the cure rate's third straight decline gets a single data point on a bar chart with no accompanying sentence (see Management's Reading below). A number that's been getting worse for three consecutive quarters, inside a business line the company itself flags as still working through Covid-19 relief, deserves its own line in the narrative every time it's reported - not just the quarters it happens to improve.

Key Financial Metrics

Year ended 31 December 2021 vs. year ended 31 December 2020

FX: Rp14,285.2 = USD 1 (31 December 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	FY2021 (IDR)	FY2021 (USD)	FY2020 (IDR)	YoY
Total Income ("Net Revenue" equivalent)	Rp4,122,555M	~$288.6M	Rp4,569,778M	⚠️ -9.8%
Profit Before Tax ("Operating Income" equivalent)	Rp1,410,958M	~$98.8M	Rp869,996M	✅ +62.2%
Net Income	Rp1,131,338M	~$79.2M	Rp701,592M	✅ +61.1%
Total Cash and Cash Equivalents	Rp969,182M	~$67.8M	Rp1,414,691M	⚠️ -31.5%

Profit before tax remains the closest operating-income equivalent for this lender, as established throughout this backlog. The 25 October 2021 quarterly figures are superseded here by the audited full-year statements; the analysis below draws on the company's audited consolidated financial statements for the year ended 31 December 2021, with comparatives for 31 December 2020, together with the February 2022 investor presentation.

Total Income's -9.8% YoY decline - management's own target had been +5% - continues the pattern flagged every quarter this year of a smaller average receivables balance still running down the pre-pandemic book, even as new bookings recovered sharply (see Key Operational Metrics below). Net income still grew 61.1%, entirely on Cost of Credit collapsing from 6.00% to 1.60% of average receivables YoY - a swing large enough to turn a shrinking top line into the best profit year in this backlog. Operating cash flow fell sharply from FY2020's Rp4,662,001M to FY2021's Rp434,315M, and it's a good-news figure, not a bad one: FY2020's inflow reflected new lending nearly stopped while collections kept coming in; FY2021's much smaller figure reflects the opposite - cash going back out the door to fund Rp13,672 billion of new bookings, up 79.8% YoY. The company paid its first interim dividend disclosed in this backlog - Rp7 per share (~Rp104,751M), approved by the Board on 6 December 2021 and paid 23 December 2021 - on top of the Rp18/share (Rp269,359M) final dividend for FY2020 already reported last quarter; a final dividend for FY2021 itself awaits the 2022 AGM.

Balance sheet metric	31 Dec 2021 (IDR)	31 Dec 2021 (USD)	31 Dec 2020 (IDR)	Change
Total Assets	Rp15,635,739M	~$1,094.6M	Rp15,200,531M	✅ +2.9%
Financing Receivables (gross)	Rp18,126,473M	~$1,269.1M	Rp17,050,711M	✅ +6.3%
Total Liabilities	Rp8,205,513M	~$574.4M	Rp8,594,377M	✅ -4.5%
Fund Borrowings (net)	Rp4,789,422M	~$335.3M	Rp4,794,844M	✅ -0.1%
Securities Issued (bonds, net)	Rp2,487,483M	~$174.1M	Rp2,978,631M	✅ -16.5%
Total Equity	Rp7,430,226M	~$520.1M	Rp6,606,154M	✅ +12.5%

Debt-to-equity^», on the same gross basis used throughout this backlog, ticked up to ~0.98x from Q3's ~0.92x - a modest re-leveraging rather than a reversal of the year's broader deleveraging trend (FY2020's ~1.18x for comparison). The company's own "Net Gearing Ratio" improved to 0.9x for the full year from 1.0x at FY2020, still well below the OJK's 10x ceiling and the industry average of ~2.0x. The move in the backlog's own gross-basis DER traces to a two-tranche Rp1.6 trillion bond (PUB V, Tahap I and II) issued 31 May and 9 August 2021, against Rp2.09 trillion of principal repaid during the year - a net paydown, even though gross issuance itself was sizeable. The related-party working-capital facility from PT United Tractors Tbk - flagged since Q1 2020 - continued amortizing on its unchanged 27 December 2024 maturity, down to Rp393,322M from Rp499,062M a year earlier.

Key Operational Metrics

• New financing originations: Rp13,672 billion for FY2021, up 79.8% YoY (Rp4,285 billion in Q4 alone, up 30.2% QoQ from Q3's Rp3,292 billion) - a sixth consecutive period of booking recovery, continuing 9M's fifth-consecutive-quarter trend.
• Managed receivables (including off-balance-sheet joint financing, per the deck): Rp14,571 billion, up 6.0% QoQ from Q3's Rp13,748 billion and up 4.5% YoY - the first positive YoY reading in this metric all year.
• Non-Performing Financing (NPF) (company's own disclosed figure^», calculated on total managed receivables including off-balance-sheet joint financing): 1.25% at FY2021, improved from 1.97% at Q3 2021 and 1.72% a year earlier - below the industry average of 3.53% per OJK data, and inside management's own <2.0% target for the year.
• Net Credit Loss (NCL) ratio (annualized; measures loans actually charged off or repossessed): 2.10% for Q4 2021 alone, down from Q3's 2.70%, though the full-year figure stayed at 2.94% YoY - improved collateral disposal and recoveries from previously written-off contracts, per management's own framing.
• Cost of Credit (COC - provisioning expense as a share of average receivables): 1.60% for FY2021, down sharply from 6.00% a year earlier, though it ticked up QoQ to 1.18% in Q4 from Q3's 0.49% as the improving-but-still-active restructured book required incremental provisioning.
• Loan loss reserve and coverage: loan loss reserve eased to 5.8% of receivables (company's own managed-receivables basis) from Q3's 6.3%; coverage of non-performing loans improved to 4.6x from Q3's 3.2x, extending the year's steady climb from FY2020's 4.1x.
• Debt-to-Equity Ratio (DER)^»: ~0.98x on a gross basis (see Key Financial Metrics above); the company's own Net Gearing Ratio improved to 0.9x from FY2020's 1.0x.
• Net Interest Spread: 11.88% for FY2021, essentially flat with FY2020's 11.91% (13.53% in Q4 alone, up from Q3's 11.49%).
• Cost to Income: 50.26% for FY2021, worse than FY2020's 46.88% - the smaller revenue base is still being run against a growing opex base as business activity recovers.
• Return on average assets (before tax): 9.63% for FY2021, up from 5.01% a year earlier (10.81% in Q4 alone).
• Return on average equity (after tax): 16.22% for FY2021, up from 11.17% a year earlier (17.82% in Q4 alone) - the strongest full-year reading in this backlog, though Q3's post noted the underlying quarterly run rate is still catching up to pre-pandemic levels.
• Earnings per share: Rp76 basic for FY2021, up from Rp47 a year earlier, on an unchanged 14,964,383,620 weighted-average shares outstanding net of treasury stock.

Update on Loan Restructuring

• Restructured balance: approximately Rp1.5 trillion as of 31 December 2021, equal to 10.2% of managed receivables - essentially flat versus Q3 2021's Rp1.5 trillion (also 10.2%), and down from more than a quarter of the book at the start of the year (31.4% in January 2021).
• Reserve coverage: Rp411 billion, or 27.8% of total restructured loans, has been allocated to cover potential losses on the remaining restructured pool - down slightly from Q3's Rp539 billion (26.4%) in absolute terms, though the coverage ratio itself improved.
• Cure rate: 83.0% of restructured accounts had returned to normal payment status as of 31 December 2021, down from Q3's 86.8%, Q2's 89.2%, and Q1's 92% - the third consecutive quarterly decline in this figure.
• Remaining restructured book breakdown: 1.1% of the pool remains under an active grace period (up from Q3's 0.3%) and 15.9% have been granted a second restructuring "with strict review" (up from Q3's 12.9%, Q2's 10.2%, and Q1's 6.5%) - the fourth straight quarterly increase in this share, even as the pool it's drawn from has stopped shrinking (see The Prescription above).
• Rescheduling program remains closed since August 2020 - every account still in restructuring is working through relief already granted in 2020, not new Covid-19 volume.

Cars Widens Its Lead Again, Others Keeps Falling Short

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

Cars - still the largest segment: Rp2,853,479M of income (69.2% of total, up from 67.3% a year earlier), with profit before tax up 139.3% YoY to Rp1,037,146M from Rp433,373M - the segment's margin (PBT/income) more than doubled, from 14.1% to 36.3%, almost entirely on the collapse in Cost of Credit discussed above.

Motorcycles - Rp758,986M of income (18.4% of total, down from 20.1%), with profit before tax up 78.7% YoY to Rp277,866M from Rp155,482M, margin improving to 36.6% from 16.9% on the same credit-cost dynamic.

Others (heavy equipment/machinery, property, and sharia financing) - Rp510,090M of income (12.4% of total, roughly flat with 12.6% a year earlier), but profit before tax fell 65.9% YoY to Rp95,946M from Rp281,141M, and net profit fell 31.8% to Rp76,931M from Rp112,737M - the only one of the three segments moving the opposite direction from the consolidated business for a full second year running, continuing the reversal first flagged in Q2 and still visible through Q3. Others' margin compressed from 48.9% to 18.8% - the deepest full-year compression of the three segments, and the filed statement still doesn't break out why this segment's credit-cost dynamics keep running opposite to Cars and Motorcycles.

Beyond the Usual

The controlling shareholder is buying out minority holders - and BFI itself plans to sell treasury shares into the same offer

On 20 January 2022, Trinugraha Capital & Co SCA - BFI's controlling shareholder - announced a Voluntary Tender Offer for up to 9,131,865,960 shares (57.19% of BFI's issued capital) at Rp1,200 per share, still awaiting OJK effectiveness as of the report date. Management's own note frames this as a vote of confidence, and states plainly that even a fully successful offer wouldn't reach 100% ownership since no shareholder is obligated to sell. What the note discloses next is the part worth watching:

BFI itself - not just Trinugraha - has applied to OJK to sell a large part of its own treasury stock through this same tender offer session. A controlling shareholder tendering for the free float, with the company simultaneously offloading its own treasury shares into that tender, concentrates ownership and reduces the public float at the same time - worth tracking for what it implies about long-run liquidity and free-float requirements, even though nothing here is disclosed improperly.

A full year after signing, neither the Bank Jago loan facility nor its joint-financing agreement has ever been drawn

The Rp600 billion bilateral Term Loan facility BFI signed with PT Bank Jago Tbk on 24 June 2021 - flagged as management-highlight-only in Q2 and still undrawn three months later per Q3's post - shows a zero balance for all of both 2021 and 2020 in the audited borrowings note. The Rp150 billion joint financing agreement signed with Bank Jago on 5 August 2021, on a 10%/90% funding split, fares no better: the year-end joint-financing balance table lists only PT Bank Rakyat Indonesia (Persero) Tbk, with Bank Jago contributing nothing to the outstanding pool. BFI's own time deposit placed with Bank Jago sits at Rp5,038M, barely changed from Q3's Rp5,000M and a fraction of the Rp50,000M it held there at FY2020. Twelve months on, this looks less like a funding relationship still finding its shape and more like one that simply hasn't started.

The first interim dividend disclosed in this backlog arrived quietly, three weeks before the tender offer announcement

BFI's Board approved a Rp7-per-share interim cash dividend (Rp104,751M) on 6 December 2021, paid 23 December 2021 - every prior year in this backlog saw only a single dividend, approved at the AGM and paid mid-year. It isn't disclosed as connected to anything, and a final FY2021 dividend still awaits the 2022 AGM, but the timing - a new capital-return event three weeks before a controlling-shareholder buyout was announced - is the kind of coincidence worth simply noting.

The three impact-investment US-dollar lenders finally drew down in full

responsAbility SICAV (Lux) Micro and SME Finance, responsAbility SICAV (Lux) Financial Inclusion Fund, and MultiConcept Fund Management S.A. - first disclosed in Q2 2021 and still carrying roughly flat balances through Q3 - are now fully drawn at a combined Rp416,179M (~$29.1M) by year-end, against a signed facility ceiling of USD 35 million. This is the diversification these lenders were originally flagged for actually materializing on the balance sheet, rather than sitting undrawn like the Bank Jago facilities above.

Allowance for impairment losses fell across all three IFRS 9 stages simultaneously

The stage-by-stage movement in the loss allowance shows Stage 1 (performing) falling to Rp569,178M from Rp609,116M, Stage 2 (underperforming) falling to Rp124,934M from Rp182,976M, and Stage 3 (impaired) falling to Rp147,919M from Rp194,313M - a genuinely broad-based improvement rather than one concentrated in a single risk category, and consistent with the across-the-board NPF/NCL improvement reported at the headline level.

Management's Reading of Its Own Quarter

The February 2022 presentation frames FY2021 as "strong overall performance in 4Q:21 in line with better market conditions," leading with new bookings up 79.8% YoY and NPF improving to 1.25% "due to rigorous risk mitigation strategy." The restructuring update explicitly states 83.0% of restructured loans "have reverted to normal payment status" - the number appears plainly on the slide, but nowhere in the deck's own commentary is it framed as a third consecutive quarterly decline, nor is the growing second-restructuring share (15.9%) discussed as a trend at all; both again sit inside a pie chart without narrative context, exactly the gap Q3's post flagged - see The Prescription above. The Bank Jago relationship goes entirely unmentioned in this presentation, just as it did last quarter.

Stock Price: A Year That Doubled the Index's Return, Nearly Five Times Over

BFI Finance shares closed at Rp1,175 on 30 December 2021, up 16.9% from Q3's Rp1,005 and a new closing high for this backlog. Per the company's own disclosure, the stock opened 2021 at Rp580 (4 January) and gained 102.6% for the full year, against the Jakarta Composite Index's 10.1% - a roughly 10x outperformance of the broader market in a single year. Over the two-year window (January 2020 through December 2021), the stock ranged from Rp1,175 (this quarter's own close, the window's new high) to the March 2020 crash low of Rp240, a 389.6% peak-to-trough swing - wider again than Q3's 366.7% figure, and still well past the >30-40% threshold applied throughout this backlog. None of this reflects the tender offer, which wasn't announced until three weeks after the year closed - the stock's 2021 gain is a pure business-fundamentals story, not an M&A-premium one.

Target Valuation Range

Market cap ~Rp17,583,151M (~$1,230.7M) at ~15.5x TTM P/E and ~2.37x P/B - BFI is priced richer again than three months ago even as the TTM P/E holds essentially flat - the same combination flagged last quarter, now running for a second straight quarter, right as the cure-rate trend argues for continued caution about the restructured book, and right as a controlling-shareholder tender offer at Rp1,200 sets a real-world floor just above the current price.

Using 14,964,383,620 weighted-average shares outstanding net of treasury stock (unchanged since December 2019) and the Rp1,175 closing price:

Market cap buildup	Q4 2021
Share price (period-end)	Rp1,175
Shares outstanding	14,964,383,620
Market capitalization	Rp17,583,151M (~$1,230.7M)
Book value (total equity)	Rp7,430,226M

Peer-multiple sanity check	Q3 2021	Q4 2021	Change
P/E (TTM)	~15.4x	~15.5x	essentially unchanged
P/B	~2.09x	~2.37x	up - price gain outran equity's 3.3% growth

Market cap is up 16.9% from Q3's ~Rp15,039,206M. TTM P/E uses FY2021's own reported net income of Rp1,131,338M - a genuine full-year trailing figure for the first time since Q4 2020, rather than an annualized partial-year number. Trailing earnings grew at almost the same pace as the share price this quarter - on an earnings basis alone, BFI isn't meaningfully more expensive than three months ago, exactly as Q3's post found. P/B tells a sharper story: at ~2.37x book, BFI now trades further above its pre-pandemic multiples than at any point in this backlog, on a Return on average equity (16.22% for the full year, 17.82% in Q4 alone) that's finally caught up to - and now exceeds - pre-pandemic run rates. The Rp1,200 tender-offer price sits just 2.1% above the year-end close, which is itself an unusual data point: a controlling shareholder is effectively putting a real, disclosed floor under the stock barely above where the market already has it, rather than at the kind of premium a typical buyout implies.

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