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WOM Finance Paper
WOM Finance Paper
INTRODUCTION
Multi finance industry in Indonesia accounts for almost 50% in total financial firm’s asset
in leasing industry. PT Wahana Ottomitra Multiartha, Tbk. (WOM Finance) is one of the leading
motorcycles financing company in Indonesia.
WOM Finance is a multi finance company that provides financing or leasing for new and
used Japanese motorcycles particularly for brands name likes new Honda, Yamaha and Suzuki.
Further details can be found on the below chapters of this paper.
CHAPTER TWO
BRIEF HISTORY OF WOM FINANCE
(By Charlie)
PT Wahana Ottomotra Multiartha was established in 1982 and the name of this company
was PT Jakarta Tokyo Leasing. In 1997, this company was acquired by PT Fuji Semeru Leasing,
the moment which caused this company changed its name to PT Wahana Ometraco Multiartha.
In year 2000, the company transformed into WOM Finance, provide financing services for new
and used motorcycles for Honda, Yamaha and Suzuki.
In 2003, the Company entered the Capital Market by issuing Bonds I amounting to Rp
300 billion. In 2004, WOM Finance became a public company through the Initial Public
Offering by the registration of its stocks at the Jakarta Stock Exchange and the Surabaya Stock
Exchange. In 2005, PT Bank International Indonesia and its consortium, International Finance
Corporation and DBS Nominees Pte, became the strategic partners of WOM Finance by
acquiring 67% of the Company’s shares. Subsequently, WOM Finance issued Bonds II
amounting to Rp 500 billion.
In 2006, the Company issued Bonds III amounting to Rp 825 billion. The Company’s
excellent performance was recognized by receiving various prestigious awards such as 2006
Multi-finance Awards from Infobank Magazine and 2007 Multi-finance Awards from Investor
Magazine. In 2007, the Company issued Bonds IV amounting to Rp 1 trillion. In the same year,
the Company was ranked as the third largest motorcycle financing company with the total assets
of Rp 4.8 trillion.
In addition to expanding its sales network, at the end of 2008 WOM Finance already
performed internal consolidation and improved risk management policies. By selecting the right
portfolios, WOM Finance has been able to increase its profit and to steer its business to a better
and healthier approach. WOM Finance already booked more than 1 million customers and
constantly made efforts to facilitate the services rendered and improved customer satisfaction by
implementing the PeSAT program (Prompt Service, Easy Processing, Safe and Trustworthy).
CHAPTER THREE
INDUSTRY STRUCTURE
(By Anindhita Chandri & Rudy Francis)
Industry Concentration
What is finance company? According to Britannica Concise Encyclopedia, “Finance
company is specialized financial institution that supplies credit for the purchase of consumer
goods and services. Finance companies purchase unpaid customer accounts at a discount from
merchants and collect payments due from customers. They also grant small loans directly to
consumers at a relatively high rate of interest.”1 What make it different from a bank? Finance
and Investment Dictionary states, “Finance company is company engaged in making loans to
individuals or businesses. Unlike a bank, it does not receive deposits but rather obtains its
financing from banks, institutions, and other money market sources”.2
There are four major financing activities; leasing, consumer financing (consumer credit),
factoring, and credit card. Most of Indonesian people misinterpret leasing as all financing
activities. Leasing is a process where firm can obtain the use of a certain fixed assets for which it
must pay a series of contractual, periodic, tax deductible payments.3 Consumer credit is basically
the amount of credit used by consumers to purchase non-investment goods or services that are
consumed and whose value depreciates quickly, such as automobiles, education, boat and trailer
loans but excludes debts taken out to purchase real estate or margin on investment accounts. 4
Factoring is a financial transaction whereby a business sells its accounts receivable to a third
party (called a factor) at a discount in exchange for immediate money with which to finance
1
Answer.com, (2010), Finance Company: Definition from Answer.com, posted on Answer web site, retrieved January
15, 2011.
2
Ibid.
3
Wikipedia.com, (2011), Leasing, posted on Wikipedia web site, retrieved February 7, 2011.
4
Investopedia.com, (2010), Consumer Credit, posted on Investopedia web site, retrieved February 7, 2011.
continued business. For example, a company sells their invoices to other company. 5 A credit card
is a small plastic card issued to users as a system of payment. It allows its holder to buy goods
and services, which the user can borrow money for payment to a merchant or as a cash advance
to the user.6
It’s interesting to observe the multi-finance industry in Indonesia, which started to grow
in 1974. In 1989, they tended to enlarge their asset with regard to consumer minded that a good
company should be big, healthy, and strong. Unless, then they will be suffered or even closed
down. The company will become more reliable than others by having great assets. The
next scenario, they began to merge into one group. It succeeded the credibility and the market
control grown up. However this scheme began to fade since they started to re-emphasize on the
basic economic principal, to maximize the profit. In 1991, there’s a big change due to tight
money policy. The interest rate increased rapidly, as a result there were many loans that have
been approved had to be postponed. This policy affected on the company’s capital. They were
sort of funds, therefore they merge each other.7
The number of multi-finance company decreased since 2007, it has to be freeze because
they couldn’t fulfill the obligation, such as the capital minimum requirement and financial report.
Badan Pengawas Pasar Modal (Bapepam) was tightening the multi-finance regulation. In 2007,
there were 5 multi-finance companies that being withdrawn by the government and 10
companies in 2009. By the end of 2009, there were 198 multi-finance companies in Indonesia. 8
Although the number of multi-finance companies were decrease, but the growth of multi-finance
industry in Indonesia is relatively high. In 2009 the growth was slowing down, due to global
economic crisis in the late 2008. However the multi-finance business was growth 17.4% in five
years (2006-2010). It’s triggered by a good economic condition. The business still relies on the
leasing and consumer credit, which contributed 95% of the total financing.9
Based on the Bank Indonesia (BI), the growth of multi-finance business is IDR 137.2
trillion by 2009 or 4.3% higher then 2008. Consumer credit is the largest contributor as IDR 90.3
trillion (65.78%). Total asset of the multi-finance business was growth by 3.3% from IDR 168.4
5
Wikipedia.com, (2011), Factoring, posted on Wikipedia web site, retrieved February 7, 2011.
6
Wikipedia.com, (2011), Credit Card, posted on Wikipedia web site, retrieved February 7, 2011.
7
Asosiasi Perusahaan Pembiayaan Indonesia, (2005), Industri Leasing di Indonesia: Sejarah, posted on Asosiasi
Perusahaan Pembiayaan Indonesia web site, retrieved January 27, 2011.
8
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
9
Ibid.
trillion to IDR 174 trillion by the end of 2009. Multi-finance industry in Indonesia is under
Bapepam. Their products and services are leasing, factoring, consumer credits, and credit cards.
The dominant multi-finance industry activities still held by the consumer credit sector (cars,
motorcycles and electronic equipment) which reached IDR 83.2 trillion.10 WOM finance engaged
in consumer credits for motor cycle. Their main activity is to provide goods and services based
on consumer needs with a system of payment in installments or periodically.11
10
Be Flasher, (August 2009), Peringkat Perusahaan Pembiayaan (leasing) 2009 (info Bank), posted on Be Flasher
web site, retrieved January 27, 2011.
11
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
12
Sullivan, Arthur, Economics: Principles in action. Upper Saddle River, New Jersey, Pearson Prentice Hall, 2003,
page 79.
13
Wikipedia.com, (2011), Supply, posted on Wikipedia web site, retrieved February 7, 2011.
14
Karnoto Mohamad, Infobank No.377: Pembersihan Multifinance Berlanjut, Jakarta, Infobank, 2010, page 13.
Motorcycle Production Wholesales Domestic and Exports
Year Production Wholesales Exports
1996 1,425,373 1,376,647 50,255
1997 1,861,111 1,801,090 51,816
1998 519,404 433,551 84,363
1999 571,953 487,751 99,651
2000 982, 380 864,144 115,278
2001 1,644,133 1,575,822 74,948
2002 2,318,214 2,265,474 52,517
2003 2,814,054 2,808,896 13,806
2004 3,897,250 3,898,744 1,774
2005 5,113,487 5,074,186 15,308
2006 4,458,866 4,428,274 42,448
2007 4,722,521 4,668,263 25,632
2008 6,264,265 6,215,831 64,968
2009 5,884,021 5,881,777 29,815
Until Aug 2010 5,052,718 5,045,339 17,382
Source: Asosiasi Industri Sepeda Motor Indonesia (AISI).
The above data excluded the non-AISI members (TVS, Bajaj, Minerva, Viar, KTM, Jialing).
There’s no accurate data for their sales, but the wholesales was predicted more or less 10,000 to
20,000 units in 2009.15 The growth of motor-cycle sales will increase the consumer credit
demand. The multi-finance company was able to absorb more motor-cycle consumer credit.16
In 2007, there are 217 multi-finance companies registered, but only 158 active
companies. Meanwhile in 2008, there were 212 multi-finance companies. 17 And by the end of
2009, there’s 198 multi-finance companies listed in Badan Pengawas Pasar Modal (Bapepam).18
15
Kompas, (January 2010), Penjualan Sepeda Motor 2009 Mencapai 5,88 Juta Unit, posted on Kompas web site,
retrived February 3rd, 2011.
16
Tempo Interaktif Bisnis, (March 2007), Laba Bersih WOM Finance Anjlok, posted on Tempo Interaktif web site,
retrieved January 15, 2011.
17
Niaga Finance, (June 2008), Izin 5 Multi Finance Terancam Dicabut, posted on Niaga Finance web site, retrived
February 3rd, 2011.
18
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
(By Rudy Francis)
Market type
WOM Finance targeted for middle to low income class consumers. Dominated of several
players in multi finance companies which created an monopolistic competition. Many of leasing
companies can enter in the market.
Barriers to entry
1. Limited financial flexibility
Multi finance companies are not legally allowed to make loans or extend credit directly to
the public. Multi finance companies are excluded from conducting direct withdrawal of supports
from the public, they also has to form of demand, deposit, and savings as collateral for loans
from banks that become creditors
2. Intense competition.
Since a lot of multi finance companies enter the market, lead to tight or intense
competition. One of the major competitors is ADIRA Finance who runs a leasing company for
automobiles and motorcycles.
CHAPTER FOUR
INDUSTRY CONDUCT
(By Arya Perdana)
- Maximum revenue of Honda Beat credit in Wom finance is on Rp.1,550,000 for down
payment with 35 times installment. The turnover is Rp.19,400,000 and the profit is
Rp.7,050,000 or 57% of the real price
- Minimum revenue of Honda Beat credit in Wom finance is on Rp.3,750,000 for down
payment with 11 times installment. The turnover is Rp.14,574,000 and the profit is
Rp.2,224,000 or 18% of the real price
From above example, Wom Finance take the price of their credit product between Rp.14,574,000
– Rp.19,400,000 with the profit between Rp.2,224,000– Rp.7,050,000 or 18%-57% of profit.
For comparison :
Price list Honda Beat in Adira finance
TYPE DP INSTALLMENT (Rp)
HONDA BEAT (Rp) 9 15 21 27 33
1,700,000 1,470,000 935,000 718,000 597,000 525,000
1,850,000 1,451,000 923,000 709,000 590,000 518,000
2,000,000 1,433,000 910,000 700,000 582,000 512,000
2,250,000 1,402,000 890,000 684,000 569,000 501,000
REAL PRICE 2,500,000 1,370,000 870,000 669,000 557,000 489,000
Rp12,350,000 2,750,000 1,339,000 850,000 654,000 544,000 478,000
3,000,000 1,308,000 830,000 639,000 531,000 467,000
3,250,000 1,277,000 810,000 623,000 519,000 456,000
3,500,000 1,245,000 790,000 608,000 506,000 445,000
4,000,000 1,183,000 750,000 577,000 480,000 423,000
- Maximum revenue of Honda Beat credit in Adira finance is on Rp.1,700,000 for down
payment with 33 times installment. The turnover is Rp.19,025,000 and the profit is
Rp.6,665,000 or 54% of the real price
- Minimum revenue of Honda Beat credit in Adira finance is on Rp.4,000,000 for down
payment with 9 times installment. The turnover is Rp.14,647,000 and the profit is
Rp.2,297,000 or 18,6% of the real price
In above comparison, Adira Finance take the price of their credit product between Rp.14,647,000
– Rp.19,025,000 with the profit between Rp.2,297,000 – Rp.6,665,000 or 18,6%-54% of profit.
From above comparison, there is no significant different between Wom finance and Adira
finance price and profit. Therefore, we can say that Wom finance price is the market price for
multi finance business
Wom finance also provide discount price or customer’s privilege with KAWAN program or
“Kartu Wom Bermanfaat”. Member of KAWAN can get the discount service and spare part.
Shareholders composition
Shareholders Number of share (%) Nominal value (Rp)
PT. BII Tbk. 1,000,600,000 50,03 100,060,000,000
Basically, yearly financial requirement of Wom finance is Rp.9 trillion. That’s amount obtained
60% - 70% from PT Bank Internasional Indonesia Tbk (BII), 5% - 10% from internal cash and
20% from bond and loans from other bank. Bank BII support Wom finance motorcycle financing
with joint financing program.
Wom finance also well establish joint venture with open the payment point through PT Pos
Indonesia, BRI, Mandiri Bank, Panin Bank and BCS in order to make easier the payment process
and to secure their financial sources.
In 2007, WOM Finance loses Rp.281,9 billion because the company should followed Bank
Indonesia’s regulation regarding risk management consolidation that cause slowing down in the
company’s performance as the effect of increment of provision for doubtful accounts. This policy
intended to subsidiary companies of which of the majority of shares are own by banks. Effect
from this policy, company’s operational expenses increased 68% from Rp.938,6 billion in 2006
to Rp.1,576.7 billion. Although the company got loses, Wom finance still occupy the big third
motor cycle financing in Indonesia and booked Rp.4,8 trillion total assets at the end of the year.
In this year the company has financed 475,771 units motorcycles worth Rp.4,8 trillion or over
5,7% of sales target in 2007 of 450,000 units. Sales of new motor cycles contributed up to 68,5%
of the total number of motor cycles financed, or equal to 325,945 units which a financing of
Rp.3,7 trillion. Financing of used motorcycles amounted to Rp.1,1 trillion with 149,829 units
sold or 31,5% of total number of motorcycles financed in the year.
In 2008, Wom finance achieve Rp.5 trillion of total motorcycle financing or rising 4,2%
compared to year 2007. That financing equal to 487,117 unit motorcycle or increasing 2,4%
compared to year 2007. Operating expenses decrease from Rp.1,576.7 billion in 2007 to
Rp.1,299.5 billion in 2008. Decreasing of operating expenses driven by 43,2% decreased in
provision for doubtful accounts and financing costs, from Rp.485,7 billion in 2007 to Rp.276
billion in 2008.
In 2009, the company booked Rp.4,2 trillion of total motorcycle financing or equal to 270,000
unit motorcycle. Operating expenses in this year was Rp.1,263 billion, which decreased
compared to year 2008 driven by decreasing in financial cost amounting.
WOM Finance is one of big players in consumer financing specifically engaged in two-
wheeled motor vehicles with japanese brand that is Honda, Yamaha dan Suzuki where these
brands have great market share in this country.
There are four important things a multifinance company must do to keep its highly
quality of performance: Focus on running the businesses, Enhancing the quality of services,
Optimizing IT to support the business activity, Improving operational cost efficiency. Some of
them are expanding branch offices and working on market potential outside Java island [2].
Production efficiency
The longer company running its business, the more efficient and stable the company will
be. Suwandi Wiratno (the president director of WOM Finance) stated that a good role model of
financing company should be able optimizing its income from many ways of services and has
efficiently managerial capability along with properly risk management implementation.
WOM Finance is aware that there are three very valuable assets for existence of the
company also for supporting the operational efficiency and productivity:
Human resources →
◦ Internal training that is done on a regular basis: credit initiation, collection training
and leadership training (soft skill)
◦ Company’s website with new enhancement to provide an easy public access to the
Company’s information. The website can be accessed through www.wom.co.id.
Risk management → starting from credit application proposal, initial process of credit
approval, final process of credit approved.
The ratio that is used to calculate this efficiency is comparing operational expenses
with operational revenues. The less this comparison number the more efficient company
is. Ratio of efficiency Rp.1, 576.7 billion / Rp.1, 231.2 billion = 1.2806.
According to the sales composition by brand shown above, in 2007 Yamaha held the
highest sales, and then followed by Honda in the second position. Yamaha and Honda
contributed the most productive brands to WOM Finance sales/financing revenue.
Performance’s overview in 2008
The number of branch offices:
o There were 140 networks including branch offices, financing unit offices and
financing postal office in nationwide. WOM Finance remained focusing on
market potential and dealer’s partnership.
o In 2008, the area of east Indonesia has increasing purchasing power due to the
raise of commodity’s price.
o In the forth quartile in 2008, global economic crisis had caused commodity’s price
decreasing, so WOM stopped the expansion in the area of east Indonesia and back
focusing on financing activities in Java island.
Measurement of average income for each employee in the company was obtained
by dividing Expenses of salary and benefit for employees by the number of Permanent
employees:
Rp.176.4 billion / 3,113 permanent employees = Rp. 0.05667 billion Rp.56.67
million.
Ratio of efficiency (total operational expenses/ total operational revenues) [2]:
Enabling consumers doing their payment transaction throughout WOM Finance branches
anywhere
According to the sales composition by brand shown above, in 2008 Honda had replaced
Yamaha in the first position as the highest sales/financing contributed to the company, and then
Yamaha shifted into the second position. After all, Yamaha and Honda kept being the most
productive brands to WOM Finance sales/financing revenue.
Performance’s overview in 2009
The number of branches:
o WOM maintained itself strategically with hard work to take all opportunities in
the market to obtain the best result. Business networks were continuously
expanded by opening new branches, unit offices, and sales representative offices
over Indonesia to absorb wider market share throughout the country. In 2009, the
Company had 141 business networks which consisted of branch offices, unit
offices, and sales representative offices.
Employees:
o In 2009, Branch Manager Refreshment Program (MRP) is held for all branch
managers.
Nonperforming loan was decreased by 50%, due to the company’s success to improve
the quality by implementing prudent risk management principal. It was supported by IT
system:
o Loan Origination System (LOS) has been built in risk policy to manage the flexible
application process flow for faster and easier approval, product segmentation and
management dashboard to monitor the process and control the quality of portfolio,
internal checking to identify blacklist customer.
◦ In February 2009, the Company has developed an Account Status Daily Update that
could monitor the account overdue status on daily basis. It also helps the Company to
establish a strategic collection process to improve its non performing loan level.
◦ In August 2009, the Company has successfully implemented Oracle Finance that
could generate accurate and timely report and also support in preparing certain reports
easily.
KAWAN (KArtu Wom bermANfaat) Membership Card System the privilege card for
the Company’s customer, valid for two years, can be extended as long as the member is
still the Company’s active customer. The KAWAN member receives various privileges
such as obtaining more points to win prize award and discount for services at participant
merchants.
In September 2009, the Company has successfully tested disaster recovery center to
address the Company’s going concern from the possibility of disaster by nature or others
damage. The backup server is located at different place from the production system to serve the
business in case of malfunction or disaster occurs to the production system.
Infobank has been doing a survey to rate among 148 financing companies per December
2008-2009. the rating assesment criterion consisting of several points such as growth, financing,
capital, solvability, efficiency, rentability (ROA, ROE). Whereas the financing companies are
classified into three fundamental category such as the ones with asset above Rp. 1 trillion, asset
in range between Rp. 100 Billion and Rp. 1 trillion, and asset under Rp. 100 Billion. Then, based
on the survey result, PT. Wahana Ottomitra Multiartha (WOM Finance) is included in the
category of financing companies with asset above Rp. 1 trillion, occupying on the thirty-third
position [2].
The infobank magazine also reviewed the group-based ten best financing companies of
ownership group-based, submitted capital group-based and go public group-based. WOM
Finance is included within the go public group-based occupying the ninth position. It awarded of
a “good” predicate, an improved and better quality than the year before (in 2008) which was
attached to a “not good” predicate [2].
- In 2007, WOM Finance was assisting in building restoration to one of the Elementary
Schools in Cidokom, Bogor, also with all the necessary facilities to facilitate the
school in the process of education (learning-teaching process). WOM Finance knows
that the quality of education is important for the continuity in nationwide generation
since it can keep our nation moving forward and growing toward bright future.
- WOM Finance provided an extension of the due date payments to its customers
which being victims during flood disaster was running down Jakarta
- Visit local penitentiaries as well as other humanitarian services like giving morale and
material support
WOM Finance has a concept of “Learn to Give”, that provide assistance with much
benefit it offers to company’s management and employees, also those who are in really
need of. Along with this contribution to society, WOM Finance is expecting to build an
image as a company that actively participates to give positive values in the nation’s
population.
[1]. www.wom.co.id
[2]. Infobank magazine/No.377/August 2010
[3]. (Investor Daily - 11 Maret 2009) http://www.ifsa.or.id/news_detail.php?id=2550
CHAPTER SIX
GOVERNMENT POLICY TOWARD MULTIFINANCE INDUSTRY
(By Respati Wulandari)
Related article:
(Bisnis Indonesia page 5, January 10 2011)
BISNIS INDONESIA
Based on the Government Law No. 81/2008 on Insurance Company Capital, every
insurance company in 2010 is obliged to fill the minimum capital of IDR40 billion, while
those having sharia unit must have IDR65 billion, and reinsurance company must have
IDR100 billion.
As of December 31, 2010, four reinsurance companies had more than IDR100 billion in
capital. Meanwhile, 15 of 138 insurance companies had not met the minimum capital.
He said that within the last three months, there were three life insurance and three general
insurance companies having completed the capital increase, while six general companies
were in the process of increasing capital.
Moreover, two general insurance companies returned their business license since they
quit the operation.
However, he did not specify the 15 companies that are hanging in the balance.
He said that the companies not having completed the capital are still seeking to increase
their capital through action plan, which has been submitted to Bapepam-LK.
In the meantime, those two insurers with sharia unit not having completed the capital face
two possibilities to resolve the problem, i.e. shifting some of their conventional capital to
their sharia unit and returning their sharia business license.
Returning license
The option of shifting part of their capital is aimed at meeting the requirement of IDR40
billion in minimum conventional capital and IDR25 billion in sharia unit. So, if they have
more conventional capital, they can shift the remaining to their unit. “But, is it possible
that they return the license of sharia unit,” he added.
He reiterated that the capital stated in the law is not the paid capital but equities. In this
case, the equities of each company may change anytime depending on the condition and
business activities.
“For example, if in December the company got big claims, its equities should decrease
sharply, but if it got big premium, the equities would also raise.”
According to him, some insurance companies not having completed the requirement
must have tried many efforts in many ways to avoid the removal of their business license.
CHAPTER SEVEN
FINANCIAL PERFORMANCES
(By Galih Savitri)
(IDR Pefindo
trillion)
Liabilities
On 2007, total liabilities was Rp 4,461 billion. The Company’s total liabilities
decreased by 29.2% to Rp 3,157.3 billion in 2008 (Table 2). The decrease was due to the
reduction of bank loans and net bonds payables. The bonds payables decreased as WOM
Finance has paid the “Bonds II WOM Finance Year 2005 B Series” of Rp 140 billion and
“Bonds III WOM Finance Year 2006 A Series” with the nominal value of Rp 200 billion.
As of 31 December 2009, the total liabilities was Rp 2,236 billion, which
decreased by 29.2% compared to year 2008 (Table 2). The decrease was mostly derived
from decrease in bank loans, decrease in other payables, decrease in bonds payable, and
decrease in due to related parties. The decrease in bank loans is due to repayment of loans
to Deutsche Investitions Und Entwicklungsgesselscaft MBH, Germany amounting to Rp
25 billion on 15 January 2009 and Rp 25 billion on 15 July 2009 and Bayerische Hypo-
Und Vereinsbank AG, Singapore amounting to Rp 242 billion during year 2009. The
decrease in other payables is mainly due to decrease in payables on joint financing, loan
channeling and sale of receivables transactions that was inline with decrease in consumer
financing receivable. The decrease in bonds payable is due to settlement of WOM II
Bonds Year 2005 Series C amounting to Rp 170 billion and WOM III Bonds Year 2006
Series B amounting to Rp 465 billion on 7 June 2009. The decrease in due to related
parties was due to repayment of loans to International Finance Corporation amounting to
Rp 23 billion on 16 March 2009 and Rp 23 billion on 15 September 2009.
Equity
On 2007, total equity was Rp 255 billion. On 2008, the total equity was increased
by 8.1 % to 275.7 billion (Table 2). The increase was caused by the decrease in the un-
appropriated accumulated losses.
The total equity as of 31 December 2009 was Rp 336 billion (Table 2), which
increased by 22% compared to year 2008. The increase was due to net income during the
year.
Revenues
The Company generates Rp 1,191 billion operating revenues in 2007. In 2008, the
Company’s operating revenues increased by 12.3% to Rp 1,462 billion (Table 2) from
consumer financing, interest income from deposits, and other income in the form of
insurance discount, insurance claim income, administration fee and payment penalties.
The total revenues in 2009 was Rp 1,356 billion (Table 2), which decreased by
7.3% compared to year 2008. The decreased was mostly due to decrease in consumer
financing income which was mainly due to decrease in new acquisition of consumer
financing transactions entered during the year.
Expenses
On 2007, operating expenses was Rp 1,577 billion. The operating expenses was
decreased by 9.7 % to Rp 1,424 billion in 2008. The decrease was mainly driven by a
decreased in provision for doubtful accounts and financing costs which was due to
decrease in bank loan.
The total expenses in 2009 was Rp 1,263 billion (Table 2), which decreased by
11.3% compared to year 2008. The decrease was mostly due to decrease in financing cost
and decrease in provision for doubtful accounts. Decrease in financing cost was caused
by decrease in bank loan and bonds payable. The decrease in provision for doubtful
accounts was caused by decrease in consumer financing receivables and improvement in
portfolio quality.
Net Income
On 2007, the Company suffered the net loss of Rp 282 billion as a result of the
implementation of Bank Indonesia’s regulation regarding the risk management
consolidation concerning the provisioning policy for subsidiary companies of which the
majority of shares are owned by banks. As a subsidiary of BII, WOM Finance was
required to apply all the provisioning policy based on productive assets classification in
accordance with the banking regulation.
On 2008, the Company was able to enjoyed a net profit of Rp 21 billion, which
was an increase of 107.3% from the net loss in 2007. The increase in 2008 income was
arising from increase in other income, decrease in financing costs as well as decrease in
provision for doubtful accounts. The Company did not distribute cash dividend for fiscal
year 2007 and 2008 due to the Company suffer losses in 2007 and net income in 2008
was unable to cover the losses in 2007.
The net income in 2009 was Rp 61 billion (Table 2), which increased by 193%
compared to year 2008. The increase was mostly contributed by the Company’s success
to reduce the financing cost and its bad debt by improving its portfolio quality.
Ratios
Return on Equity (ROE)
Return on equity indicates the Company’s capability to generate return for its
shareholders which is measured by comparing the net income to the total equity. WOM
Finance’s 2007 – 2009 ROE was always increased from year to year. In 2007, ROE was
(110.5)% due to the Company’s net loss. In 2008, ROE was 7.4% and 18% in 2009
(Table 2) due to higher increase in net income.
Bonds
As of December 31, 2009, there were four public offering of WOM Finance bonds.
WOM Finance Bonds I
Bond Nominal Value Fixed Interest Rate Due Date
Series A Rp 150,000,000,000 13.50% 11 November 2006
Series B Rp 150,000,000,000 13.75% 11 November 2007
Peer Comparison
Table 3: Selected Peer Comparison
WOM Finance BFI Finance Adira Finance
As of Dec. 31 2009 2008 2007 2009 2008 2007 2009 2008 2007
Financial Highlights (Bil. IDR)
2,57 3,43 4,81
Assets 3 3 3 2,393 3,531 2,524 4,330 3,592 3,302
Liabilities 2,23 3,15 4,46 859 2,173 1,321 1,677 1,642 2,077
6 7 1
33 27 35
Equity 6 6 2 1,534 1,358 1,203 2,652 1,950 1,225
1,35 1,46 1,19
Revenue 6 2 1 910 890 570 3,941 3,379 2,484
1,26 1,42 1,57
Expenses 3 4 7 518 560 291 2,283 1,959 1,683
6 2 (282
Net income 1 1 ) 301 232 200 1,212 1,020 560
Ratios
Return on equity 18. 7. (110.5
(%) 0 5 ) 17.8 18.6 21.3 45.7 52.3 45.7
2. 0. (6.0
Return on assets (%) 4 6 ) 9.9 7.7 10.2 13 28 17
4. 8. 12.
Gearing ratio (x) 6 0 0 0.9 1.2 0.3 0.6 0.8 1.7
Non performing loan 2. 4. 6.
(%) 4 8 7 0.8 1.2 1.0 0.8 0.9 1
CONCLUSION
Multi finance industry in Indonesia significantly increases in 2007-2009 period in
term of total asset and profit. In the term of regulation, multi finance industry facing
more strict regulation applied by government. As a result, number of multi finance firms
decreased. Wholesale of motorcycle which can be represent as demand in this industry
(multi finance focusing on motorcycle financing) also significantly increased but the
multi finance industry get more competitive.
Even though the market share of WOM Finance was decreasing over the year
2007 through 2009 due to more competitors joining in the multi finance industry, the
company had 141 business networks consisting of branch offices, unit offices, and sales
representative offices. WOM Finance has committed in implementing its Corporation
Social Responsibility and realizes that the welfare of society is essentially affecting the
company growth, to make it into reality WOM Finance works with several organizations
to be active in economics, education, health-care and social care.
The need of to revised these two regulation is very important to multi finance
companies development. The authority to collect and manage funds from the public
directly, multi finance companies can provide credit to the community with a
competitive rate and competitive with banks
REFERENCES
Infobank Magazine/No.377/August 2010
Investor Daily-11 Maret 2009
www.adira.co.id
www.answer.com
www.beflasher.com
www.bfi.co.id
www.datacon.co.id
www.idx.co.id
www.ifsa.or.id
www.investopedia.com
www.kompas.com
www.niagafinance.com
www.pefindo.co.id
www.tempoineraktif.com
www.wikipedia.com
www.wom.co.id