RPT-Fitch Affirmed the rating Mayapada and Muamalat

Mon May 26, 2014 5:44am EDT

Related Topics

(Repeat for additional subscribers)

May 26 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the National Long-Term rating of PT Bank Muamalat Indonesia Tbk (Muamalat) at 'A (idn)' and PT Bank Mayapada International Tbk (Mayapada) at 'A-(idn)'. Outlook is Stable. Fitch also set a National Short-term rating at 'F1 (idn) to Muamalat and Mayapada. A complete list of results ranking available at the end of this report.

A (idn)

National ranking in the category ' A ' indicates the expectation would risk failure low pay relative to other issuers or securities inIndonesia. However, a change in circumstances or economic conditions may beaffect the capacity to pay in a timely manner than commitment Financial shown by the higher rating categories .

F1 (idn )

National Rating ' F1 ' indicates the capacity to pay financial commitments The most powerful in a timely manner relative to other issuers or debt securities in Indonesia . National rating scale of Fitch , the ratings given the lowest default risk relative to the rest of Indonesia .

If specific liquidity profile is strong, a "+ " is added to the ratings given .

Activator Factor Rating - National Rating .

The ratings reflect the probability of Muamalat limited above support from the government , if necessary , given the important role Muamalat in the development of Islamic banking in Indonesia . Muamalat is Islamic bank The second largest by assets in Indonesia, although the market share of banks accounting for only about 1 % of total system assets . Islamic banking assets formed approximately 4.8 % of the total assets of the system in 2013. In the assessment standalone , Muamalat has a franchise , profitability and capital not as strong as the larger banks other .

Transactions NPL ratio deteriorated in 1Q14 mainly due to credit growth high in three years anyway . Backup still below average industry in the period. In Fitch outlook , asset quality Transactions have the possibility to come under pressure in the economic conditions increasingly challenging in 2014. Though Fitch core capital of banks increased to 11.9 % at the end of 2013 from 7.1 % at the end of 2012 - mainly due to the size issue right IDR3.5tn - capitalization can be easily eroded by credit growth ongoing high in the medium term .

The stages of Mayapada reflect Fitch views that the bank owning a franchise is smaller than the other banks are more large , resulting in the probability of government support will be limited , if needed. The tender stage , also consider the bank 's performance adequate with adequate capitalization , modest profitability and asset quality moderate .

Profitability of banks rated likely to be under pressure given absence of expectation of increase in the cost of credit and financing . quality of assets Mayapada improved in April 2014 due to the bank's risk management more tight . In its efforts to memperjuat capital , has issued Mayapada subordinated loans amounting to IDR700 billion rights issue and by IDR300 billion in 2013. Further developments for the franchise Mayapada assessed is limited due to the increasing competition in the market .

Mayapada able to keep the loan -to-deposit ratio at 87 % in late 2013 due to the expansion of deposits that can keep pace with credit growth . However , high-cost deposits are not a form of demand deposits and savings approximately 86 % of total deposits at the end of 2013 .

Stable outlook reflects Fitch's expectation that the two banks will maintain a stable risk profile by proactively shapingreserves in the medium term amid an increasingly challenging economic conditionswhich can lead to increase in non-performing loans . Competition in the savings andinterest rates higher savings can hamper collection efforts and can reduce the liquidity of the two banks , which have more franchise small compared with other banks greater .

Sensitivity Ranking - National Rating

Improved rankings can occur on both banks of improvement sustainable in terms of asset quality, maintaining profitability levels strongly adapted to the risks and high capital and domination of low cost deposits in the balance sheet. Negative effect of debt action can occur from a significant deterioration in asset quality and attenuation Muamalat and Mayapada profitability and reduction in government support the Islamic banking industry to Muamalat case.

A complete list of ratings is as follows:

Muamalat:

Long-Term National Rating affirmed at 'A (idn)'; Outlook Stable

Short-Term National Rating affirmed at 'F1 (idn)'

Mayapada:

Long-Term National Rating affirmed at 'A-(idn)'; Outlook Stable

Short-Term National Rating assigned at 'F1 (idn)'

FILED UNDER: