Fitch Ratings Indonesia has affirmed PT Bank ICBC Indonesia's (ICBCI) National Long-Term Rating at 'AAA(idn)' with a Stable Outlook.

The National Short-Term Rating has been affirmed at 'F1+(idn)'.

'AAA' National Long-Term Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union.

'F1' National Short-Term Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country or monetary union. Where the liquidity profile is particularly strong, a '+' is added to the assigned rating.

Key Rating Drivers

Support-Driven Ratings: ICBCI's National Ratings reflect Fitch's view of a high likelihood of extraordinary support, if needed, from the bank's higher-rated parent Industrial and Commercial Bank of China Limited (ICBC; A/Stable/bbb), which owns a 98.6% stake in ICBCI.

Linked to Parent's IDR: ICBCI's rating is linked to ICBC's Long-Term Issuer Default Rating (IDR). This reflects our belief that any extraordinary support, if required, would flow from the China sovereign (A/Stable) to ICBCI through ICBC. This is based on our opinion of ICBCI's strategic importance to ICBC's growth strategy in Indonesia.

Significant Ability to Provide Support: Fitch believes ICBC has a strong ability to support its Indonesian subsidiary, considering its credit rating and ICBCI's small size relative to ICBC. ICBCI's assets and equity constituted 0.1% of ICBC's total at end-2024.

Strong Support Propensity: We believe ICBCI is a strategically important subsidiary for ICBC, as it provides the parent a presence in the largest economy in Southeast Asia and facilitates the financing needs of Chinese home clients investing in the country. Our assessment also takes into consideration the high level of integration as well as the potential reputational damage to ICBC if ICBCI were to default.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of ICBCI's National Long-Term Rating could arise from a weakening in its overall credit profile relative to the universe of entities rated on Indonesia's National Rating scale.

This could result from a material weakening in ICBC's ability to support ICBCI, which could lead to a downgrade of ICBCI's ratings. Any significant weakening in ICBC's propensity to support its subsidiary may also put downward pressure on the rating. This could stem from a significant deterioration in the group's perception of ICBCI's strategic value to the group, such as from a material change in ownership.

A downgrade could also occur if we believe that support from the Chinese sovereign is less likely to flow to ICBCI. This would lead us to link the subsidiary's rating to ICBC's 'bbb' Viability Rating rather than the 'A' Long-Term IDR.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

There is no rating upside for the National Ratings as they are already at the highest point on the scale.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

ICBCI's rating is credit-linked to ICBC's Long-Term IDR.

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