Corporate Financing Needs Increased in October 2021

Bank Indonesia's (BI) Survey on the Supply and Demand for Bank Financing recorded an increase in corporate financing needs in October 2021. This is reflected in the weighted net balance (WNB) of 16.7%, up from 11.1% the previous month.

Respondents in several sectors reported increased financing needs. The WNB for the trade sector increased to 3% in October 2021, the automotive repair sector rose to 0.9%, the food and beverage sector increased to 0.6%, and the construction sector rose to 0.5%.

The majority of respondents (79.8%) stated that the increased financing needs were to support operational activities. Meanwhile, 35.7% of respondents were paying maturing obligations. 27.1% of respondents cited financing to support domestic recovery, 12.4% for investment activities, and 5.4% for other purposes.

Regarding the main source of financing, most respondents still relied on internally generated funds or retained earnings (55.8%). Other sources included increased bank loans (9.3%), loans from parent companies (7%), utilization of overdraft facilities (6.2%), sale of non-productive fixed assets (2.3%), and other financing sources (17.1%).

The majority (76%) of respondents stated that their choice of financing source was primarily influenced by the ease and speed of obtaining funds. Meanwhile, 12.4% of respondents cited optimizing existing facilities, 10.1% cited lower costs (interest rates), 3.1% cited avoiding exchange rate risks, 1.6% cited a decline in corporate securities ratings due to the pandemic, and 17.1% cited other reasons.