Fitch Also Raises The Rating of Eight Banks

Fitch Ratings also raised the long-term credit rating of eight banks following the increase in the Government of Indonesia's debt rating from BB + to BBB-. The increase is in the debt securities denominated in rupiah.

Fitch Ratings

The eight banks are PT Bank Mandiri Tbk (BMRI), PT Bank Central Asia Tbk (BBCA), PT Bank Rakyat Indonesia Tbk (BBRI), PT Bank BNI Tbk (BBNI), Lembaga Pembiayaan Ekspor-Impor Indonesia (LPEI), PT Bank OCBC NISP Tbk (NISP), PT Bank International Indonesia Tbk (BNII), and PT Bank CIMB Niaga Tbk (BNGA). The overall outlook for the bank declared stable.

Rating of three banks, BMRI, BBRI, and BBNI, as well as one institution, namely LPEI, increase from BB + to BBB-. "The rating reflects the high probability and the strong support from the government as the controlling shareholder. Banks have a significant impact on the economy of Indonesia," said Julita Wikana, Director of Fitch's Financial Institutions Team.

The ranking of BNGA, NISP, and BNII increases from BB + to BBB. This rating reflects the strong support of the foreign holding company, especially during the time when Indonesia entered the investment grade position. The increase in ratings was also supported by the commitment of the holding company to put Southeast Asia as a core part of their strategy. Fitch calculates, their three exposures in Government Securities (SUN- Surat Utang Negara) owned by Indonesia declined from year to year, lower than the previous ownership of the three state-owned banks mentioned above.

While the upgrade of BCA, was assessed from its viability assessment from the track record and strength of credit distribution. Fitch's affirmation of the viability of the other banks reflects their stable credit profiles despite the global uncertainty becomes a threat of the moderate domestic economic outlook.

Source: Kompas