January 9, 2017 / 9:29 AM / 7 months ago

Fitch Revises Outlook on Indoexim to Positive, Affirms 3 State-Owned Banks

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(The following statement was released by the rating agency) JAKARTA/SINGAPORE, January 09 (Fitch) Fitch Ratings has revised the Outlook on Indonesian state-owned entity Lembaga Pembiayaan Ekspor Indonesia (Indoexim) to Positive from Stable. Fitch has also affirmed the Issuer Default Ratings (IDRs), National Ratings, Support Ratings, Support Rating Floors, and issue ratings of Indoexim, PT Bank Mandiri (Persero) Tbk (Mandiri), PT Bank Rakyat Indonesia (Persero) Tbk (BRI) and PT Bank Negara Indonesia (Persero) Tbk (BNI). The Outlooks on the IDRs and National Ratings of Mandiri, BRI and BNI are Stable. A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS IDRS, NATIONAL RATINGS, SUPPORT RATINGS AND SUPPORT RATING FLOORS The state-owned banks' IDRs and National Ratings are support-driven and, together with their Support Ratings (SRs) and Support Rating Floors (SRFs), reflect the high probability they would continue to receive state support in times of need. This is based on the banks' relative systemic importance in the Indonesian economy, including the degree of their policy roles - especially in the case of Indoexim - as well as the state's majority ownership in each of them. The National Long-Term Rating on BNI is lower than those of Mandiri and BRI to reflect Fitch's view of its lower systemic importance (at around 8% of total system assets at 9M16). The revision of our Outlook on Indoexim follows our revision of the Outlook on Indonesia's sovereign rating to Positive from Stable on 21 December 2016 (see Fitch Revises Indonesia's Outlook to Positive; Affirms at 'BBB-' (here)). Fitch views state support for the three commercial banks Mandiri, BRI, and BNI as somewhat less than that for Indoexim, given their lighter policy roles and lower state ownership. In addition, Fitch believes that supporting regulations (including potential introduction of bail-in of senior creditors) for the Financial System Crisis Prevention and Mitigation Law, due to be announced during 2017, may hinder the government's ability to support these banks. Indoexim is not subject to this law, being a non-deposit taking organisation. ISSUE RATINGS The banks' rupiah- and foreign currency-denominated senior bonds and bond programmes are rated at the same level as their IDRs and National Ratings, in accordance with Fitch's rating criteria. RATING SENSITIVITIES IDRS, NATIONAL RATINGS, SUPPORT RATINGS AND SUPPORT RATING FLOORS Changes to Indonesia's sovereign rating (BBB-/Positive) may lead to changes to the banks' ratings. However, positive action on the three commercial banks' ratings are less likely in the absence of clarity on bail-in regulation. A change in the government's ability and willingness to provide extraordinary support would affect these banks' IDRs, SRs and SRFs. Fitch will review the potential impact on SRs and SRFs, including the possibility of negative rating action, as further key details and supporting regulations for the Financial System Crisis Prevention and Mitigation Law become available during 2017. Deterioration in the state-owned banks' standalone financial profiles alone is unlikely to have an impact on their IDRs and National Ratings unless the factors underpinning state support also weaken. The National Rating of BNI could be upgraded if we view its systemic importance to have risen. ISSUE RATINGS Any changes in the banks' IDRs and National Ratings would affect the ratings on the banks' rupiah- and foreign currency-denominated senior bonds and bond programmes. The rating actions are as follows: Indoexim - Long-Term Foreign-Currency IDR affirmed at 'BBB-'; Outlook revised to Positive from Stable - Short-Term Foreign-Currency IDR affirmed at 'F3' - Support Rating Floor affirmed at 'BBB-' - Support Rating affirmed at '2' - Senior unsecured and EMTN programme affirmed at 'BBB-' Mandiri: - Long-Term Foreign-Currency IDR affirmed at 'BBB-'; Outlook Stable - Long-Term Local-Currency IDR affirmed at 'BBB-'; Outlook Stable - Short-Term Foreign-Currency IDR affirmed at 'F3' - Support Rating Floor affirmed at 'BBB-' - Support Rating affirmed at '2' - National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(idn)' BRI: - Long-Term Foreign-Currency IDR affirmed at 'BBB-'; Outlook Stable - Short-Term Foreign-Currency IDR affirmed at 'F3' - Support Rating Floor affirmed at 'BBB-' - Support Rating affirmed at '2' - National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(idn)' - Senior unsecured rating affirmed at 'BBB-' - Medium-term notes affirmed at 'AAA(idn)' BNI: - Long-Term Foreign-Currency affirmed at 'BBB-'; Outlook Stable - Long-Term Local-Currency IDR affirmed at 'BBB-'; Outlook Stable - Short-Term Foreign-Currency IDR affirmed at 'F3' - Support Rating Floor affirmed at 'BBB-' - Support Rating affirmed at '2' - National Long-Term Rating affirmed at 'AA+(idn)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(idn)' - Senior unsecured rating affirmed at 'BBB-' Other ratings of the banks are not affected by this action. Contact: Primary Analyst Ambreesh Srivastava Senior Director +65 67967218 Fitch Ratings Singapore Pte Ltd One Raffles Quay, South Tower #22-11 Singapore 048583 Secondary Analysts Gary Hanniffy, CFA (Mandiri and BNI) Director +62 29886808 Iwan Wisaksana (BRI and Indoexim) Director +62 29886807 Committee Chairperson Jonathan Cornish Managing Director +852 22639901 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here National Scale Ratings Criteria (pub. 30 Oct 2013) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1017312 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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