S&P assigns 'BBB' rating to BNI's senior notes<\/p>\n
JAKARTA (JP): Standard and Poor's (S&P) has assigned a \"BBB\"
\nlong-term rating to Bank Negara Indonesia's (BNI) US$145 million
\nsenior notes issue due 2007.<\/p>\n
The international rating agency said yesterday the triple-B
\nrating reflected the likelihood of Indonesian support for BNI if
\nthe bank became financially distressed.<\/p>\n
While S&P believes that the government is likely to support
\nBNI if it has financial problems, the government's willingness to
\nintervene may be tempered in time. Such probable support is
\nexemplified by the government's recent action of standing behind
\nthe debt obligations of the troubled state-owned Bank Pembangunan
\nIndonesia (Bapindo).<\/p>\n
But the government's willingness to extend support may
\nmoderate because of the trend toward partial privatization of
\nstate banks -- evidenced by the 1992 conversion of state banks
\ninto limited liability companies, recapitalization of state banks
\nfrom 1992 to 1994 and the partial float of BNI in November 1996.<\/p>\n
BNI's liabilities are not guaranteed by the government.<\/p>\n
BNI, the first state bank listed on the Jakarta Stock
\nExchange, has an established name and a 9 percent market share of
\ncommercial banking assets, which provides potential economies of
\nscale.<\/p>\n
S&P said that BNI's initial public offering in November last
\nyear had increased the bank's equity to $1.13 billion,
\ntranslating to an equity-to-assets ratio of 8 percent, comparable
\nwith those of larger private sector banks.<\/p>\n
\"BNI's profitability is acceptable but not as strong as the
\nmajor private banks',\" the rating agency said.<\/p>\n
In the six months to June 30, 1996, BNI reported an
\nannualized 0.91 percent return on average assets. But asset
\nquality, according to the agency, remains sensitive.<\/p>\n
\"Although the bank's 6.13 percent non-performing assets-to-
\ntotal loans ratio is better than the state bank average, it is
\nnot as good as the major private sector bank average.\" it said.<\/p>\n
The rating outlook is stable. The outlook reflected S&P's
\nexpectation that BNI's market position, large distribution
\nnetwork and large capital will provide the bank with the
\nfinancial flexibility to adapt in an increasingly competitive
\nmarket. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sp-assigns-bbb-rating-to-bnis-senior-notes-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}