RPT-Fitch Affirms Rating Four state-owned bank and its subsidiaries

Wed Oct 9, 2013 6:11am EDT

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Oct 9 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed rankings of the four state-owned banks in Indonesia as follows:

- Rating Issuer Default Rating (IDR) PT Bank Mandiri (Persero) Tbk (Mandiri) affirmed at 'BBB-'.

- Rating S PT Bank Rakyat Indonesia (Persero) Tbk (BRI) affirmed at 'BBB-'.

- Rating S PT Bank Negara Indonesia (Persero) Tbk (BNI) affirmed at 'BBB-'.

- National Long-Term rating of PT Bank BTN (Persero) Tbk (BTN) affirmed at 'A (idn)'.

Fitch has also affirmed the National Long-Term rating of PT Mandiri Tunas Finance, a subsidiary of the Independent, at 'AA (idn)'.

Complete list of rankings is available at the end of this report.

Affirmation of IDRs and National Long-Term Long-Term ratings support, the support rating floor of state-owned banks reflect ekstraordinari support sustainable trend, if necessary. Self-affirmation viability ratings, BRI and BNI reflect expectations

Fitch that the banks will maintain individual credit profile stable, despite rising economic downturn domestic.

PER RANKINGS - S LONG-TERM RATINGS, RATINGS NATIONAL LONG LONG, RATINGS SUPPORT, SUPPORT AND LIMITS LOWER RATINGS RATINGS Viability.

Long-Term IDRs, National Long-term ratings, rating Support and Support Rating reflect the lower limit of the magnitude ekstraordinari will support for state-owned banks in times of need government based on majority ownership, systemic importance of banks The role of the domestic economy and the banks on government policy. Fitch believes that the four banks have impact Systemic against the state due Mandiri, BRI, BNI and BTN respectively is the largest bank, the second largest, fourth and tenth of total assets banking in Indonesia. Four banks together constitute 35.2% of the total system assets at the end of the first half of 2013. Term National Rating BTN length lower than other banks because the government reflecting the impact of lower systemic.

Viability Rating (Viability Rating / VR) Bank Mandiri at 'bb +' reflects improved asset quality, healthy profitability, sufficient capital, majority ownership of the state and its position as the largest bank in Indonesia.

BRI Viability Rating at 'bb +' reflects the strong profitability - one one of the highest in the industry - and its position as the second largest bank in Indonesia in Indonesia focuses on micro-credit with asset quality satisfying. BNI Viability Rating at 'bb' reflects the bank's performance relatively weak, despite the improvement of asset quality and profitability, as well as smaller networks than Mandiri and BRI.

Fitch expects profitability and revenue banks will experience but the pressure will be maintained, although the condition of the domestic economy slows, because the banks have improved their credit risk management and portfolio credit has been more diversified.

Credit growth is expected to slow to about 15-20% due to rising interest rates, commodity price declines and the depreciation of the rupiah. it is can also lead to an increase in non-performing loans in 2013 from the position low at the end of June 2013. The increase in funding costs, lower demand loans and rising provisioning costs will likely inhibit growth profit.

Of the four banks, Fitch expects loan growth BTN will most slightly affected by the progressive advance of regulations for the purchase property that was issued in September 2013. The regulation does not impact on subsidized loans, which is largely a portfolio BTN which is where most of the borrowers are first time home buyers.

Fitch estimates that, in the medium term, the financial performance of banks owned by the government will remain good in the midst of economic conditions deteriorated, supported by strong cushion to absorb losses considering the strong profitability, and high provisioning sufficient core capital. Based on the results of the stress test, state banks have sufficient income before provision to absorb the loss rate higher borrowing sanpai 5-5.5% of the total loan BRI, Mandiri and BNI and 2-3% of the BTN, which is higher than the average loan losses during 2009-H113 is smaller than 1% for the BTN, 1% for Mandiri, and 2% for BRI and BNI.

BTN lower provisioning costs compared with three state-owned banks others, recovery (recovery) of troubled loans are housing loans consistently better thus providing an additional buffer against losses loan. Fitch notes that Bank Indonesia has been more proactive in prevent excessive risks that will increase sharply in the system.

For example, BI issued a regulation in 2012 to advance and September 2013 to organize a consumer loan asset quality, loan ratios imposed to deposit more stringent for banks, and implement secondary provisioning policy (secondary reserve) in 2013 as the repson the deteriorating domestic economic conditions.

FACTORS-DRIVER RATINGS S LONG-TERM RATINGS, RATINGS NATIONAL LONG-TERM, SUPPORT RATINGS, RATINGS DOWN LIMITS AND SUPPORT RATINGS viability.

Change of Indonesia's sovereign ratings ('BBB-' / Stable) and the tendency government to provide timely support would be cause changes in the ratings of those banks. Decline in financial profile individual state-owned banks will have an impact on small kemungkinanannya IDRs and national rating unless the factors that affect the support of government also weakened. Global Initiasi to reduce government support implicitly the banks can negatively impact ratings bank, but this is not believed to be applied in Indonesia in the future close.

FACTORS RANK MOVER - Viability Rating

The significant weakening asset quality can impact negatively on bank profitability and capital impairment risks may put pressure ranked against the viability of banks. State-owned banks have a financial profile relatively strongly indicate the possibility of an increase in viability ratings The banks can maintain appropriate levels of profitability risk, asset quality and healthy capital amid the conditions perekoniman worse today.

MOVER FACTORS LEVEL - Debt Level

The ratings program bonds denominated in foreign currency and rupiah and senior bonds is equal to the Long-Term IDRs and ratings National Long-Term and Short-term National rating. it is reflects the corporate bond obligations that are direct, not conditional, not guaranteed and not a subordinated debt and rated equally with unsecured bonds and other senior. Changes to Long-Term IDRs and National Long-ranking Long and Short-term National ratings will be affected rankings bonds.

BRI subordinated bond ratings assigned three ranks below the rank National BRI obtained from viability ratings, which take into account one notch for loss severity and two notches for non-performance risk, which reflects the delay clause coupon and / or principal.

CONSIDERATION OF FACTORS MOVER AND LEVEL STAGING - PT Mandiri Tunas Finance

The ratings PT Mandiri Tunas Finance, which is engaged in financing car, powered by a high propensity of support from shareholders majority, Mandiri, if necessary. The rankings are reflects the close ties and strategic interests of the Bank Mandiri MTF in developing consumer loan portfolio. Mandiri will continue to provide funding support for MTF through joint financing scheme where Mandiri bear most of the credit risk. Any dilution in the ownership and weakening support from Mandiri will be able to put pressure on the ratings MTF.

Berkut is a complete list of rankings:

Mandiri:

- Long-Term Rating USD Foreign Currency affirmed at ' BBB - ' ; Stable Outlook

- Long-Term Rating INR in Local Currency affirmed at ' BBB - ' ; Stable Outlook

- Short-Term Rating USD Foreign Currency affirmed at ' F3 '

- Minimum Support Rating affirmed at ' BBB - '

- Support Rating affirmed at '2 '

- Viability Rating affirmed at ' bb + '

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

BRI :

- Long-Term Rating USD Foreign Currency affirmed at ' BBB - ' ; Stable Outlook

- Short-Term Rating USD Foreign Currency affirmed at ' F3 '

- Minimum Support Rating affirmed at ' BBB - '

- Support Rating affirmed di'2 '

- Viability Rating affirmed at ' bb + '

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

- II/2009 rupiah subordinated debt rating affirmed at ' A + (idn )

- Medium Term Debt Rating ( MTN ) and MTN program in Foreign Currency affirmed at ' BBB - '

BNI :

- Long-Term Rating USD Foreign Currency and Local affirmed in ' BBB - ' ; Outlook Stable

- Short-Term Rating USD Foreign Currency affirmed at ' F3 '

- Minimum Support Rating affirmed at ' BBB - '

- Support Rating affirmed di'2 '

- Viability Rating affirmed at ' bb '

- National Long-term rating affirmed at ' AA + (idn ) ' ; Outlook Stable

- Rating senior foreign currency bonds affirmed at ' BBB - '

BTN

- National Long-term rating affirmed at ' AA (idn ) ' ; Outlook Stable

- Peribgkat senior rupiah bonds affirmed at ' AA (idn ) '

- Rupiah bond program rating affirmed at ' AA (idn ) '

MTF

- National Long-term rating affirmed at ' AA (idn ) ' ; Outlook Stable

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