Fitch Ratings upgrades ratings of 10 Indonesian banks
Fitch Ratings upgrades ratings of 10 Indonesian banks
Leony Aurora, The Jakarta Post, Jakarta
In light of the positive changes in Indonesia's banking sector
and recent upgrade in its sovereign rating, international agency
Fitch Ratings has raised the ratings of 10 major lenders in the
country.
According to a statement released by Fitch recently, Bank
Mandiri, Bank Central Asia (BCA), Bank Rakyat Indonesia (BRI),
Bank Negara Indonesia (BNI), Bank Danamon, Bank NISP, Bank Buana
and Bank International Indonesia (BII) have had their long-term
foreign currency ratings raised one notch from B+ to BB- with a
positive outlook.
The BB- rating, which indicates a speculative environment with
a possibility of credit risk developing, remains three levels
from the lowest investment grade of BBB-.
Meanwhile, the individual ratings of Bank Niaga and Bank
Permata went up one rung from D/E to D, two notches below
"adequate", the statement said.
The upgraded ratings are another vote of confidence for
Indonesia's financial sector. Fitch upgraded Indonesia's long-
term foreign and local currency ratings last month to BB- from
B+, and affirmed its short-term rating at B, both with positive
outlooks, citing its confidence in the government's policies in
improving the country's economy.
Fitch also cited the "very positive changes" in the country's
banking system as one of the reasons for the upgrade.
To speed up the process of consolidation in the sector, Bank
Indonesia recently announced a new policy stipulating that funds
injected from one bank to another bank would not be calculated in
its legal lending limit, provided that their financial statements
were consolidated.
After being crushed in the monetary crisis in 1997, the
banking sector in Indonesia has got back on its feet and begun to
flourish somewhat.
With the improving economy that has spurred consumer lending
and a declining trend in the central bank's benchmark interest
rate (SBI) last year, banks are enjoying hefty net interest
earnings.
The nation's second largest lender BCA, for example, estimates
its unaudited 2004 profit to rise by 30 percent to Rp 3.1
trillion (US$336 million) from Rp 2.39 trillion the year before.
BNI estimates that its 2004 profit will likely reach Rp 3.1
trillion, a seven-fold increase over the Rp 420 billion posted in
2003.
The improved credit rating from Fitch is another positive
point in a string of upgrades by the company and other global
rating agencies.
Two months ago, Standard and Poor's also raised Indonesia's
creditworthiness rating. It upgraded the country's long-term
foreign currency one step to a B+ from a B, while the local
currency rating was upgraded two levels to BB from B+.
Along with the country's ratings, S&P upgraded the long-term
foreign currency credit ratings on Bank Mandiri, Bank Danamon and
BNI to B-plus from B.
Moody's Investors Service, another acknowledged credit rating
agency, at present rates Indonesia's ceiling for foreign currency
debt at B2, while its ceiling for foreign-currency bank deposits
is rated B3 -- both considered stable.