TEXT:Fitch Affirms Bank OCBC NISP at 'BB+'; Outlook Positive

(The following was released by the rating agency)

JAKARTA/SINGAPORE, December 05 (Fitch) Fitch Ratings has affirmed PT Bank OCBC NISP Tbk's (OCBC NISP) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB+' with Positive Outlook. The agency has also affirmed OCBC NISP's seven-year rupiah subordinated bond III 2010 at 'AA(idn)'. A full rating breakdown is provided below.

The ratings reflect continuing strong commitment from its financially strong parent bank, Oversea-Chinese Banking Corp (OCBC, 'AA-'/Stable). OCBC is Singapore's second-largest bank by assets. In Fitch's view, OCBC's commitment to OCBC NISP is reflected in its 85.06% ownership, capital support, name association and operational alignment in most key areas. OCBC NISP's Viability Rating of 'bb' and Individual Rating of 'C/D' reflect its medium size, consistent asset quality, satisfactory capital position despite its weak profitability compared with its peers.

Any change in support from its parent, OCBC, would have an impact on OCBC NISP's ratings. In addition, any rapid loan growth that could affect the bank's asset quality and/or capital position could put pressure on its Viability Rating, particularly if the economic environment were to deteriorate.

OCBC NISP's profitability has been pressured by tight competition, as net interest margin (NIM) decreased slightly to 4.4% at end-Q311 (2010: 4.8%). However, its return on assets (ROA) increased to 1.3% at end-Q311 (0.9%) on lower provisioning charges as a result of improved asset quality. Fitch believes that continued tight competition may pressure the bank's profitability in the future.

The bank's non-performing loan (NPL) ratio declined to 1.5% of gross loans in Q311 (2010: 2%). The lower NPL ratio was due to improved asset quality in corporate and commercial/SMEs amid more favourable economic conditions. Provision cover, although lower than the average of its larger peers (160%), remained satisfactory at 111% at end-Q311 (2010: 99%).

The bank's Tier-1 and total capital adequacy ratio (CAR) were 12.3% and 15.1% at end-Q311, respectively, although slightly lower than in 14.1% and 17.6% at end-2010. Fitch believes that OCBC NISP's will maintain its CAR ratio at the minimum 12%.

Under Fitch's hybrid security rating criteria, the rating of the bond III 2010 is notched two levels below the National Long-Term rating to reflect the issue's cumulative coupon deferral features.

Established in 1941, OCBC NISP was previously owned by the Surjaudaja family, and weathered the 1997-1998 Asian crisis without a state bail-out. OCBC, which acquired 22.5% of OCBC NISP in mid-2004, now owns 85.1% following the legal completion of the merger between OCBC Indonesia and OCBC NISP on January 2011.

OCBC NISP's ratings:

Long-Term Foreign and Local Currency IDRs affirmed at 'BB+'; Outlook Positive

Short-Term Foreign Currency IDR affirmed at 'B'

National Long-Term rating affirmed at 'AAA(idn)'; Outlook Stable

Individual Rating affirmed at 'C/D'

Viability Rating affirmed at 'bb'

Support Rating affirmed at '3'