Fitch Ratings Indonesia has assigned
The Outlook on its National Long-Term Rating is Stable.
'
'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 timely extraordinary support from the bank's higher-rated parent,
Anchored to Parent's IDR: The subsidiary's rating is linked to its parent's Long-Term Issuer Default Rating (IDR), as we deem that extraordinary support would be allowed to flow from the Chinese sovereign to its Indonesian subsidiary through ICBC, if necessary. This is based on our view of ICBCI's strategic importance to ICBC's penetration in
Considerable Ability to Support: Fitch believes that ICBC, which is the world's largest bank, has a strong ability to support ICBCI, considering its high credit rating and ICBCI's relatively small size. This is counterbalanced by potential constraints on transfer and convertibility risks, reflected in
High Support Propensity: We believe that ICBC has a high propensity to support ICBCI, given our view that
Standalone Credit Profile: ICBCI's standalone credit profile does not drive its support-driven ratings. It incorporates the bank's nominal domestic franchise, heightened risk appetite, and lingering asset quality issues, as reflected in its high portion of restructured loans. This is counterbalanced by ICBCI's satisfactory profitability and funding profile, which benefit from its association with the ICBC group.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A material weakening in ICBC's ability to support ICBCI could result in 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 very significant deterioration in the group's perception of its business prospects in
A downgrade of ICBCI's National Long-Term Rating could also arise from a weakening in its overall credit profile relative to the universe of entities rated on
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.
Date of Relevant Committee
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 support-driven National Long-Term Rating is credit-linked to the parent's Long-Term IDR, based on our expectation that extraordinary support would be allowed to flow from the Chinese sovereign.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl LT
New Rating
WD(idn)
Natl ST
F1+(idn)
New Rating
WD(idn)
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