FINANCIAL SERVICE COMPANY FAIR VALUATION BY USING THE EXCESS RETURN MODEL, CASE STUDY OF PT. BPR FAJAR WARAPASTIKA

• Main Author: Dye Ralang Nugok, M.
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/78045
• Institution: Institut Teknologi Bandung

In the evolving financial landscape of Indonesia, the consolidation of rural banks has been identified as a potentially significant trend. Given the escalating consolidation trend among rural banks in Indonesia, accurate company valuation has become crucial in enabling strategic decision-making, particularly in potential shareholder exit activities or divestment. The objective is to assess the fair valuation of PT. BPR Fajar Warapastika, a rural bank located in Lampung, by using an Excess Return Model. The Excess Return Model, chosen for its robust evaluation of intrinsic company value, takes into account the cost of equity, expected return on equity, and book value of equity. This comprehensive analysis is augmented by an assessment of significant financial ratios, including Capital Adequacy Ratio, Non-Performing Loan, Return on Asset, Operating Expense to Operating Revenue, Loan to Deposit Ratio, and Cash Ratio. This approach offers a holistic insight into the company's financial health and performance. This valuation is crucial in providing stakeholders with a clear view of the company's financial health and future prospects. It would support regulators, existing shareholders, and potential investors in their decision-making process, aligning their strategies for consolidation, possible exit activity, and investments. It could also provide rural banks, like PT. BPR Fajar Warapastika, with insights into business operations, ultimately aided the mission to bolster financial inclusion in Indonesia's rural regions. Additionally, it could serve as a blueprint for the valuation of other rural banks in Indonesia, thereby contributing to a more stable and transparent financial environment.