Fitch Ratings Indonesia has affirmed
The Outlook is Stable.
'AA' National Ratings denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations.
Key Rating Drivers
Support Underpins Rating: The National Rating of BJB is support-driven and reflects Fitch's view of a moderate probability that the bank would receive extraordinary support from the Indonesian central government, if needed. This assessment is based on BJB's systemic importance as
Moderate Systemic Importance: BJB had a market share of around 1.7% of banking industry assets as of
Adequate Support Ability: Fitch believes the Indonesian sovereign (BBB/Stable) has a moderate ability to support Indonesian banks, given the small size of the banking system relative to peers.
Sufficient Support Propensity: Fitch believes that BJB is important to the provincial governments of
Modest Standalone Profile: BJB's standalone credit profile does not drive its National Rating, but reflects Fitch's assessment of a franchise that is marginally below its mid-sized bank peers, a risk profile that is conditioned by its modest franchise, and adequate asset quality supported by its focus on the low-risk consumer loans segment. We also consider that its profitability profile is below those of its peers, partly because BJB's funding franchise and capitalisation are weaker compared with its major Indonesian bank peers.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of BJB's National Long-Term Rating would arise from a weakening in its credit profile relative to other entities rated on our Indonesian national rating scale. This would most likely stem from a decline in the central government's propensity to support the bank, which could happen if the regional governments' ownership in the bank falls significantly such that we believe they will cease to be the controlling shareholders. However, we consider this to be unlikely in the near term.
A downgrade could also result from a sustained decline in the bank's systemic importance such that we believe contagion risk becomes very limited. This would most likely arise from a sustained decline in the bank's market share, especially in its home markets of
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of BJB's National Long-Term Rating would most likely arise from an increase in the government's propensity to support the bank. This could stem from an increased linkage with the central government or a significant increase in the bank's systemic importance. However, we believe this to be unlikely in the next 12-18 months.
BJB's National Long-Term Rating could also be upgraded if we believe the central government's ability to provide support to
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
BJB's National Long-Term Rating is credit-linked to
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