In this article you will read about
- General situation in the markets where Alfa Finance group operates
- Recovery plan and period from the crisis
General situation in the markets where Alfa Finance group operates
The pandemic in the world is slowly decreasing, also in Poland and Indonesia.
Poland started to lift lockdown restrictions in mid-May and most businesses including bars and restaurants are allowed to reopen. The total Coronavirus cases amounted to the sum of 28 577. This amount is still increasing, however much slower than at the beginning of the pandemic. The country also has recently announced that it would reopen its borders to other EU member states and also reopen international flights. The cinemas, theatres and all other events are allowed to reopen soon. Audience capacity is limited to 50% and it will be compulsory to wear a face mask. It will again be possible to organise fairs, exhibitions, and conferences. It is expected that some parts of the economy will start a revival.
The total Coronavirus cases in Indonesia amounted to the sum of 39 294 and it is still increasing every day. During June several reliefs have been implemented in restrictions – religious sites and activities, as well as museums and outdoor sports can open following strict health guidelines. The shopping centres and markets will be reopened within the month of June as well as the recreation parks. However, in most of Indonesia cities there are still high incident rates that need to be controlled. They still have to follow strict health protocols such as working and studying from home, as well social and economic activities remaining closed under the Application of Tight Control Areas (WPK). The local governments have warned that, in case there will be a rise in the number of contagions, the lockdown can be imposed back at any moment. Hence, we are looking to resume our business, but will do it in a very controlled manner.
Recovery plan and period from the crisis
- During the peak of the COVID pandemic and due to imposed lockdowns in Indonesia and Poland, DoFinance was mostly focusing on optimizing internal processes, substantially reducing costs and following the developments in the market. During this period new loan issuing was either stopped completely or a very small stream of new loans was issued in order to be able to monitor the borrower sentiment and repayment discipline. The loan issuing was stopped primarily because it was predicted that loan quality in certain risk brackets could decrease.
- As it was presented earlier, Alfa Finance group did everything it could in order to sustain its main lending business and look for additional opportunities that could ensure survival of the business and the ability to recover losses and resume normal operation of DoFinance business, consequently.
- During the past 2 months the repayment discipline of already issued loans deteriorated significantly, however, one must take into account that it could be a normal reaction to the crisis of a global scale. We are expecting that it could be a result of a short-term shock and that the repayments should follow, but at a later stage.
- Due to suggestions from governments of both – Indonesia and Poland many of the loans have been extended or restructuring was imposed that prolongs the repayment period allowing the debtor to recover from the shock and increase the likelihood of receiving repayments.
- Early next week Alfa Finance Indonesia will resume issuing of new loans in Indonesia, since the quality of the repayments of new loans is very good.
- Also Poland, with its reduced interest rates starts to look more promising and Alfa Finance group is planning to resume lending activities very soon.
- Starting from the beginning of this year until today Alfa Finance group is still searching and is engaged in negotiations from prospective investors to invest additional funds that would allow to recover from the crisis even faster. The purpose of the investment would be mainly to resume issuing of the loans and some additional investment in IT systems and infrastructure. During April and May the activity of the investors have reduced substantially, but now we are seeing signs of recovery. According to poll made by Bloomberg.com the sentiment of investors is improving a lot and particularly in Germany it is one of the highest in the last 5 years.
- In the beginning of May DoFinance submitted all of the documents to receive the license for Investment Brokerage Company, hence it would be further supervised by the Latvian Financial Capital Market Commission. Already since April, the financial regulator is receiving reports from DoFinance and is imposing “soft” supervision. Currently, DoFinance is undergoing licensing process that could last for a period of 6 or more months.