20250131_SMMF_Laporan Informasi dan Fakta Material_31848621_lamp3.pdf

services and include one of Indonesia's largest insurance groups, PT Asuransi Sinar Mas
(ASM, National Insurer Financial Strength: AA+(idn)/Stable).


Support-Driven Ratings: SMMF's ratings continue to benefit from our expectation that
SMMA would provide extraordinary support to the subsidiary, if needed. That said, the
subsidiary plays only a modest role in its parent group's overall franchise, which may
limit the parent's propensity to provide support to SMMF relative to its more material
operating subsidiaries.


Modest Franchise, Group Role: SMMF is a small non-bank finance company. It provides
consumer, fleet and sharia financing, along with factoring services. It has some business
synergies with other SMMA group companies, but we believe its operation is less
significant for SMMA compared with its two larger, more prominent, sister companies,
ASM and PT Bank Sinarmas Tbk (A(idn)/Stable). SMMF comprised a modest 5% of
SMMA's consolidated assets as of 6M24.


Parental Associations Underpin Support: We believe SMMF's shared branding and
operational links with Sinar Mas Group reinforce the parent's propensity to support its
subsidiary. Shareholder guarantees from SMMA covered 68% of SMMF's bank debt at
end-1H24, presenting a cost to the parent should SMMF default. The company also
receives ordinary support from other Sinar Mas Group businesses, such as joint
financing and cross-selling with Bank Sinarmas, direct shareholder loans from SMMA as
well as customer referrals from other group entities.


Weak Standalone Profile: SMMF's standalone credit profile does not directly drive its
ratings, but is characterised by its small market share, variable asset quality and volatile
profitability. This is balanced by a funding profile that benefits from ordinary parental
support. SMMF continues to encounter challenges to its profitability, with annualised
pre-tax income/average assets of -5.4% in 6M24 (2023: -5.5%; 2022: -2.8%) on higher
insurance expenses and credit costs. It also recorded significant trading losses in 2023,
due to the divestment of securities investments at a loss.


Reducing High-Risk Financing: SMMF's asset quality performance is more volatile than
at peers, which we attribute to weaker underwriting standards and risk controls. Its
gross non-performing loan ratio remained relatively stable at 3.5% in 1H24 (2023:
3.6%), aided by bad-debt write-offs amounting to 11% of gross loans. The company
aimed to mitigate credit risk by exiting riskier two-wheeler financing since end-2022,
but sustained asset-quality improvement remains subject to execution risk.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating
Action/Downgrade

Rating sensitivities are no longer relevant as the ratings have been withdrawn.

Factors that Could, Individually or Collectively, Lead to Positive Rating
Action/Upgrade

Rating sensitivities are no longer relevant as the ratings have been withdrawn.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING

The principal sources of information used in the analysis are described in the Applicable
Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

SMMF's National Ratings are linked to the credit profile of its major shareholder, SMMA,
based on our expectation of potential extraordinary support.

ESG CONSIDERATIONS

Not applicable.

                                   RATING ACTIONS



   ENTITY / DEBT           RATING                                      PRIOR 



   PT Sinar Mas                                                          BBB+
                              Natl LT
   Multifinance                                                          (idn) Rating
                                                                         Outlook
                              BBB-(idn) Rating Outlook Stable
                                                                         Stable

                              Downgrade




                              Natl LT   WD(idn)      Withdrawn



                                                                         F2(idn)
                              Natl ST   F3(idn)    Downgrade




                              Natl ST   WD(idn)      Withdrawn

VIEW ADDITIONAL RATING DETAILS
FITCH RATINGS ANALYSTS

Tisha Mamuaya
Analyst
Primary Rating Analyst
National
+62 21 4000 0544
tisha.mamuaya1@fitchratings.com
PT Fitch Ratings Indonesia
DBS Bank Tower 24th Floor, Suite 2403 Jl. Prof.Dr. Satrio Kav 3-5 Jakarta 12940


Grace Wu
Senior Director
Committee Chairperson
+852 2263 9919
grace.wu@fitchratings.com

MEDIA CONTACTS

Leslie Tan
Singapore
+65 6796 7234
leslie.tan@thefitchgroup.com


Vivian Kam
Hong Kong
+852 2263 9612
vivian.kam@thefitchgroup.com


Additional information is available on www.fitchratings.com

PARTICIPATION STATUS

The rated entity (and/or its agents) or, in the case of structured finance, one or more of
the transaction parties participated in the rating process except that the following
issuer(s), if any, did not participate in the rating process, or provide additional
information, beyond the issuer’s available public disclosure.

APPLICABLE CRITERIA

National Scale Rating Criteria (pub. 23 Dec 2020)

Non-Bank Financial Institutions Rating Criteria (pub. 18 Jan 2024) (including rating
assumption sensitivity)

ADDITIONAL DISCLOSURES

Solicitation Status
Endorsement Policy

ENDORSEMENT STATUS

PT Sinar Mas Multifinance                                                   -



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