Message from CEO


PT Sarana Multigriya Finansial (Persero) carries a mission from the government to disburse funds from the capital market to mortgage lenders. The objective is to enhance acceleration of mortgage volume in Indonesia as an effort to increase capacity and sustainability of home financing so that it is affordable by the people, especially those in middle to lower society. Fund flow activity is carried out in two ways, first is by facilitating securitization program for mortgage lender, and secondly is by providing financing facility for mortgage lender that funded by debt securities issuance. Those two programs are the Company’s main activities.


Throughout 2016, the global economy was still marked by a number of challenges. The Brexit triumph via a referendum in the UK, which led to an agreement that the UK will exit from the EU, surprised many parties. Volatility in financial markets increased as a direct response to the geopolitical situation in the European region.
Volatility in global financial markets increased due to uncertainty concerning the plan to increase the US benchmark interest rate, the Fed Funds Rate. This certainty had been resolved by the end of the year, exactly on December 2016, when the Central Bank of the United States, the Federal Reserve (Fed), decided to raise the interest rates by 25 basis points.
As a country with an open economy, the risks that occur in the global markets influence the performance of the domestic economy, particularly the performance of trade. The Central Statistics Agency (BPS) recorded the cumulative export value of Indonesia up to November 2016 at only USD130.65 billion, down 5.63% compared to the same period in 2015.

Nevertheless, Indonesian economy generally remains positive compared to the previous year. According to BPS data, economic growth in 2016 reached 5.02% GDP growth (yoy), better than the previous year at 4.79%. The economic performance was strengthened by stable domestic demand, with household consumption and investment contributing the largest shares. According to Bank of Indonesia, the investment contribution came primarily from construction activities.

The domestic economy in 2016 also was marked by tight financial liquidity, especially in banking, though it did not last all year. This increase in liquidity was mostly due to the enthusiasm of people participating in the tax amnesty program, where funds from overseas banks were repatriated.

In a vulnerable situation, the potential risk from the charges is greater because of the stagnating business performance due to declining purchasing power. This matter may affect the Company’s business, since one of its business units is engaged in banking.


Strategic Policy

PT Sarana Multigriya Finansial (Persero) was established in 2005 with the objective of establishing and developing a secondary mortgage market in Indonesia. SMF carries out the mission from the government to channel the long-term funding from the capital market to the housing sector through mortgage distributors. This mission is performed to accelerate the volumes of mortgages in Indonesia in order to rise the capacity and sustainability of housing finance, thus making housing affordable to the community, especially the lower class.

The Company disbursed funding through two main activities, namely to facilitate the securitization program for mortgage channeling institutions and provide financing facilities to mortgage distributors with funds from the issuance of debt securities.

After operating for more than a decade, the Company has successfully overcome challenges. Assets of the Company grew exponentially, as well as the reputation as a secondary mortgage company in accordance with the Company’s mission has been successfully constructed. Based on the Company’s Long-term Plan (RJPP), the Company’s strategy is entering the stage of “Strengthening the Market.” The focus is to continue the implementation of the work program and make adjustments to the work program in order to achieve performance improvement. The work program of the Company is synergized with the work plan of the Ministry of Public Works and Housing, as well as the preparation of supporting infrastructure for the establishment of Housing Finance Information Systems (HFIS).

The Company provides long-term funding through the lending activities with funds derived from the issuance of debt at capital markets to be channeled into the housing finance sector through a mortgage dealer. In anticipation of the lengthy process of debt issuance, the Company uses funds from equities in advance as bridging, later to be replaced with the proceeds from the issuance of debt securities resulting in multiples in the distribution.

In addition, to strengthen the secondary financing market, the Company partnered with the Regional Development Banks (BPD). The Company recognizes the great potential of local banks in providing mortgage financing, particularly to middle and lower income people.

The Company also seeks to increase its role in order to become more centralized by issuing Asset-Backed Securities with a form of Participation Letter (RMBS-PC), as well as a Guarantor of the asset-backed securities issued. The issuing of RMBS-PC is in accordance with Financial Services Authority Regulation No. 23/POJK.04/2014 on Guidelines for Publishing and Reporting Asset-Backed Securities in the form of Participation Letters (RMBS-PC) in the framework of Secondary Housing Financing. RMBSPC as mandated in Presidential Decree No. 1 Year 2008 in conjunction with Presidential Decree No. 19 Year 2005 as the basis for the establishment of the Company.

Strategic Initiatives in 2016

Throughout 2016, the Company performed a number of strategic initiatives but the principal objective is to support then Company’s business performance. Those initiatives that has been implemented are:

  1. 1. Extending the financing base The Company developed a financing segment with the Regional Development Banks to expand financing for primary mortgages (KPR). This initiative has the potential to improve the performance of the Company, both in financing and securitization.
  2. The development of SMF mortgage for the Company in 2016 completed the planned formation of SMF mortgages, which is the accumulation of a number of quality mortgages from several of the Regional Development Banks (BPD). This project will begin to be implemented in 2017
  3. Advocacy of Presidential Decree No. 101 Year 2016 on the 2nd Amendment of Presidential Regulation No. 19 Year 2005. According to Presidential Decree No. 1 Year 2008, the Company’s role in lending is limited until the year 2018. This matter is not in line with the development of the last few years with the secondary mortgage market that has occurred in many countries. The growth of secondary financing market is more driven by refinancing programs, as the model for lending. Therefore, the Company performed advocacy to change these limits, which eventually succeeded by the issuance of Presidential Decree No. 101 Year 2016.



Throughout 2016, the Company issued debentures amounting up to Rp2.75 trillion as a funding strategy. The capital income was utilized to develop the primary housing market through financing to the mortgage channeling institutions. This business activity will encourage an increasing number of mortgage distributors with mortgage portfolios, later to be securitized. Debt securities issued by the Company in 2016 have a term from 370 days to 5 years, as adjusted to the market demand of mortgage financing. The debt securities issued through the public offering of bonds III stages IV, V and VI.


The Work Plan and Budget of the Company (RKAP) in 2016 targeted the Company’s total assets for Rp12.03 trillion. By the end of fiscal year 2016, the realization was Rp13.12 trillion, or 109.06% passed the target. Meanwhile, the target that is prepared by the Company for 2017 is Rp14.49 trillion.

The above target achievement was due to the management implementing business strategies while maintaining the principle of prudent management. In addition, the Company’s success is also supported by good teamwork of the entire division, as well as staying focused on achieving targets.


Financial performance

In 2016, the Company’s net profit increased by 28.05%, from Rp247.76 billion to Rp317.28 billion. This increase was due to revenue growth of 18.63%, from Rp825.83 billion to Rp979.68 billion.

The profit margin reached 41.29%, whilst on 2015 it was at 38.03%, an improvement indeed. The figure is a calculation of the profit before tax divided by operating income. Thus, the indicator shows the Company’s ability to gain profit has increased.

In 2016, the Company recorded a cumulative ratio of funds channeled to the primary housing market through lending and securitization to the amount of paid-in capital (primary market financing to capital ratio) of 6.85x, greater than 2015 at 6.75x. This number shows that the Company still has the capacity to channel financing to the primary housing market, either through loans or securitization.

The Company’s performance in 2016 prompted an increase in assets to Rp13.12 trillion. In comparison to 2015, the total was Rp10.06 trillion, the Company had an increase up to 30.43%. These improvement, among others was contributed by the Company’s treasury and tantamount in 2016 that reached Rp2.97 trillion, an increase of 124.41% compared to 2015, which amounting to Rp1.32 trillion.

Operational performance

In 2016, the Company also expanded its activities through increasing cooperation with the Regional Development Banks. This partnership was done in order to support the improvement of people’s access to home ownership. This activity is in line with the Company’s mission, namely to build and develop the secondary mortgage market, which can increase the availability of medium and long term funding for the housing sector, which enables home ownership to become affordable for every Indonesian family. To support the success of business activities, the Company also provides assistance to clients, especially in the framework of consultation. This consultation is necessary given that the Company’s business product has not been understood well by external stakeholders, thus explanations are of vital importance. The operational performance of the Company in 2016 is increasingly efficient. It is indicated by the ratio of operating expenses to operating income, which amounted to 58.71%. Meanwhile, in 2015, the ratio was recorded at 61.97%. The Company will continue to improve the operational performance to increase every year.

Human Resource Development

In 2016, the Company completed the “Human Capital Roadmap” that will be implemented in 2017. The roadmap was prepared for human resource development over the span of the next three years, which include a competency learning path, career path and salary grading. To develop human resource talents within the Company, management also provides training opportunities either in house or outside the office. This policy is applied because the Company considers human resources are important assets that ensure sustainable business performance.


Based on the Articles of Association, the amount of the dividends distributed result from net income as determined by decision of the GMS in accordance with the provisions and the applicable legislation. To date there has been no distribution of dividends by the Company.


During the preparation of business prospects for the year book of 2017, the management had come up with external and internal factor. For the external factor, for example it got to do with global economic matter that has the potential to influence domestic financial market. In general, Bank of Indonesia estimated that in 2017 economic affair would improve. The economic growth of the world is expected to be far better than 2016, even though it is still protracted in developed countries. However the economic growth in developed countries is far more sustainable, because it is backed with the fixation of price commodity. Despite that, it is stated from Bank of Indonesia’s report of “Economic development in Finance and International Cooperation” Triwulan III-2016 reminded us of the potential risk that can hold the improvement of global economy.

These potential problems are as follows :

  1. Political instability from the ongoing issue of disintegration in EU and the campaign of Donald Trump, who is now the president of the US, that promises to stress on the global economic workforce.
  2. The ongoing process of Britain’s exit from the EU wasn’t the ideal situation to follow
  3.  Increase in US interest rates, Fed Fund Rates (FFR)
  4. Rebalancing China’s economy

In those kinds of situation, Indonesia’s economy is to be expected to be stable with a high expectation of growth for as high as 5.1%. The World Bank projected that the economy in Indonesia will increase at 5,3%. This positive projection will give a signal that Indonesia’s economy will stand firm in facing potential global risks. A stabilized economy can greatly affect a Company’s workforce, since Limited Liability Company often is sensitive to macro conditions, especially when it’s related to funding.
In a stabilized economy, the cost of fund that the Company will spend is far more reasonable compared to when it was a risky economy. From the industry point of view, housing sector is estimated to be more fervent in 2017. This is in line with the improvement of loan to value (LTV) policy as stated in BI Regulation no. 18/16 / PBI / 2016 issued in August 2016. The policy states that the down payment for mortgages in conventional banks is only 15%. While in sharia banks is around 10%.
The leniency on loan in property sector will affect the growth on mortgage lending. Therefore, expansion of house ownership or primary market will take place with a potential to give a positive effect for the Company that mainly engage in finance to a mortgage lender along with asset-backed securities. Taking this situation into account, the Company has set a higher target on performance compared to 2016. In addition to supporting external conditions, internal factor is defined as experiences and growth of a business in the Company serves as an indicator that supports accomplishments in 2017.

The Company consistently upholds the principles of transparency, accountability, responsibility, independence and fairness which constitute the key aspects of good corporate governance (GCG). In an effort to develop into a sound company, both financially and operationally, the Company has an unswerving commitment to continue to run its business in adherence to the GCG principles.

The Company’s commitment to implement GCG is reinforced with the formation of the Audit Committee, Risk Management Committee and Internal Audit Unit which oversees compliance with Company Regulations, including its Code of Business Ethics and Work Ethics. The Company is mindful of complying with all rules and regulations at all times issued by the Financial Services Authority, Indonesian Ministry of Finance and the Indonesian Stock Exchange in conducting its operational activities, and other regulations including in regard to the delivery of annual reports, financial statements and other reports which the Company has the obligation to prepare. For a brief while, the decision-making mechanism which the Board of Directors is expected to implement, the Company has drawn up the Board of Directors’ Pact which among other provisions regulates the delegation of powers and responsibilities in the event of the absence of one member of the Board of Directors and the mechanism for preparing the Company Work Plan and Budget. The Company has also revised the Guidelines on the Procurement of Goods and Services in conformity with State Owned Enterprise Ministerial Letter No. PER-05/MBU/2008 of September 3, 2008 on General Guidelines for the Procurement of Goods and Services of State-Owned Enterprises.

Corporate Social Responsibility

SMF as one of the state-owned company under the Ministry of Finance, implements the Partnership and Environmental Development Program (PKBL) in compliance with existing policies and regulations. The Company implements the PKBL program to guarantee effectiveness and accurate targeting. In order to ensure that the flow of PKBL funds truly benefits communities in need, the Company has formed a PKBL Team assigned to conduct field surveys, as well as to facilitate and monitor the proper use of such funds.

SMF’s main CSR activities include the provision of working capital for home construction/ repair, developing public facilities/infrastructure and housing infrastructure, and enhancing the community’s quality of life, while improving the environment through various activities such as renovating/providing public facilities/ infrastructure; improving health and education services; providing training; supporting religious activities and improving places of worship; preserving the arts and culture; conserving the natural environment; and providing disaster relief.