Corporate Financing Needs Slowed in November 2021

Bank Indonesia's (BI) Survey of Banking Financing Supply and Demand recorded a slowdown in corporate financing needs in November 2021. This is reflected in the Weighted Net Balance (WNB) of corporate financing demand, which stood at 14.8% last month, slowing down from the October 2021 WNB of 16.7%.

This slowdown occurred across several sectors. The WNB for the agricultural sector slowed to 1.5% in November 2021. Furthermore, slowdowns were also observed in the automotive repair and construction sectors. This was influenced by a decrease in operational activities in line with weak domestic and export demand.

On the other hand, several sectors showed an increase in financing needs in November 2021. These sectors include the manufacturing industry, mining, and transportation and warehousing.

The majority of respondents (84.9%) stated that increased financing needs were to support operational activities. Meanwhile, 37.8% of respondents paid maturing obligations. Furthermore, 33.6% of respondents cited financing to support domestic recovery, 16% for investment activities, and 5.9% for other purposes.

Based on the primary source of financing, most respondents still relied on internally generated funds or retained earnings (55.5%), although this slightly slowed compared to October 2021 (55.8%).

Other sources included increased bank loans (10.1%), utilization of overdraft facilities (8.4%), loans from parent companies (7.6%), sales of non-productive fixed assets (2.5%), and other financing sources (15.1%).

The majority (75.6%) of respondents stated that their choice of financing source was primarily influenced by the ease and speed of obtaining funds. Meanwhile, 16.8% of respondents cited lower costs (interest rates), 14.3% cited optimization of existing facilities, 7.6% cited avoiding exchange rate risks, 0.8% cited a decrease in corporate securities ratings due to the pandemic, and 15.1% cited other reasons.