Fitch Affirms Bank Negara Indonesia's rating at BB+

JAKARTA: Fitch Ratings has today affirmed PT Bank Negara Indonesia Tbk's (BNI) long-term foreign and local currency issuer default rating (IDRs) at BB+, national long-term rating at AA(idn), and individual rating at C/D. The outlook is stable. "The affirmations
Wandrik Panca Adiguna
Wandrik Panca Adiguna - Bisnis.com 14 Desember 2010  |  09:29 WIB

JAKARTA: Fitch Ratings has today affirmed PT Bank Negara Indonesia Tbk's (BNI) long-term foreign and local currency issuer default rating (IDRs) at BB+, national long-term rating at AA(idn), and individual rating at C/D. The outlook is stable. "The affirmations of BNI's ratings are underpinned by its gradually improving levels of profitability, asset quality and capital after the impending rights issue, and concerted efforts to enhance its risk and corporate governance framework," said Iwan Wisaksana, Director with the agency's Financial Institutions group, in a press statement obtained by Bisnis today.Its national rating is currently lower than that of other large banks in Indonesia, and an upgrade will be dependent on a sustained record of improved financial performance which, in Fitch's opinion, is more likely over the longer term. Although the government's stake in BNI is estimated to fall to 60.0% (Q310:73.3%) following the IDR10.5 trillion rights issue at end-2010, Fitch expects government support to remain forthcoming in times of need, given its systemic importance as Indonesia's fourth-largest bank. These considerations underpin the Support rating at 3 and support rating floor of BB, which are similar to other systemically important banks in Indonesia. With the IDR10.5 trillion rights issue, Fitch estimates that BNI's tier 1 capital adequacy ratio (CAR) and total CAR would be 16% and 18%, respectively, by end-2010 (Q310 Tier 1 CAR: 10.2%; Q310 total CAR: 12.0%). BNI's profitability continued to improve in Q310. Its return on assets (ROA) and return on equity (ROE) were 2.6% (2009: 1.7%) and 25.1% (2009: 16.3%), respectively, as net income rose 59% yoy on the back of a generally healthy domestic economy. BNI's NPL ratio eased to 4.4% in Q310 (2009: 4.7%) due to recovery efforts, as well as more favourable economic conditions, but remained higher than the industry average of 3.4%. NPL coverage was a reasonable 120% in Q210 (2009: 120%), although below the peer average (2009: 141%). In Fitch's view, further strengthening of its NPL coverage is crucial for its credit fundamentals, given its improving, but still modest asset quality. BNI, incorporated in 1946, is one of four state-owned banks and the fourth-largest bank in Indonesia by total assets. (wiw)

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