Jan 10 - Fitch Ratings has upgraded PT BFI Finance
Indonesia Tbk's (BFI Finance) National Long-Term rating to 'A+(idn)' from
'A(idn)'. The Outlook is Stable.
Fitch has also upgraded BFI Finance's bond programme, its IDR575bn rupiah bond
issued under the programme as well as its IDR225bn MTNs to 'A+(idn)' from
'A(idn)'. Fitch has also assigned the second rupiah bond issued under the
programme with a maturity of up to three years an 'A+(idn)' rating.
The upgrade reflects BFI Finance's continued strong capitalisation and low
leverage. The sustained improvements have resulted in ample liquidity and higher
profitability relative to its peers, making BFI Finance the strongest standalone
finance company in Indonesia.
However, a further upgrade is unlikely due to its limited franchise and reliance
on wholesale funding leading to inherently higher liquidity risk compared with
banks. Its rating also recognises its modest asset quality, which weakened
slightly in Q312.
BFI Finance managed to report healthy profitability at end-Q312 despite tighter
consumer finance regulations in 2012. Its leverage remains low at 1.3x compared
with its rated peers' 4x. Liquidity remains satisfactory with sound
asset-liability management. The company also benefits from funding support from
its largest shareholder, Trinugraha Capital, a fund management company led by
TPG Capital, which also owns majority stakes in Bank BTPN. The company had
unutilised credit facilities totalling IDR370bn from the bank (33% of total
unutilised credit facilities) in Q312.
Fitch believes that the company's asset quality will be under pressure in the
near- to medium-term as demand for leasing equipment from the commodity sector,
which counts for about 20%of its total financing portfolio, will remain weak in
2013. However, deterioration in asset quality should remain manageable given
that its capitalisation, at IDR2.7trn, is one of the highest in the industry.
BFI Finance also formed a new risk management division in 2012 to improve
controls over credit and operation risk.
Established in 1982, BFI Finance focuses on the leasing and consumer financing
business in Java, Sumatra, Kalimantan and Eastern Indonesia areas. BFI Finance
is owned by international fund management companies, including Trinugraha
Capital (44.95%) and Northern Trust S/A AVFC (8.3%).