OREANDA-NEWS. Fitch Ratings Indonesia has today affirmed PT Panin Sekuritas Tbk's National Long-Term Rating at 'AA-(idn)' and National Short Term Rating at 'F1+(idn)'. The Outlook is Stable.

'AA(idn)' Long-Term National Ratings denote expectations of very low default risk relative to other issuers or obligations in the same country. The default risk inherently differs only slightly from that of the country's highest rated issuers or obligations.

'F1(idn)'Short-Term National 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. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

KEY RATING DRIVERS

NATIONAL RATINGS
Panin Sekuritas's National Ratings reflect the company's consistently solid capitalisation and low risk appetite relative to other domestic peers. The Stable Outlook reflects Fitch's expectation that Panin Sekuritas will maintain a steady risk profile over the near to medium term without significant increase in leverage.

The company continues to remain profitable over business cycles, underpinned by its strong earnings generation. Asset management and brokerage fees continued to be the largest contributors to revenue in 2015. The company's assets under management (AUM) of IDR11.1trn at end-2015 made it the ninth-largest asset manager in Indonesia. Retail accounts made up 97% of its brokerage clients.

The company's capitalisation is one of the highest among Indonesian securities companies. Its credit profile is supported by an equity/assets ratio of about 72% at end-2015 (2014: 72%). Fitch expects Panin Sekuritas' capital to provide a comfortable buffer against cyclical business risks and unexpected losses from market turmoil. Limited borrowings contribute to the relatively low leverage, with the company's business expansion largely funded through retained earnings.

Panin Sekuritas maintains a relatively liquid balance sheet in response to the uncertain global financial climate. Liquid assets to short-term funding stood at 490% at end-2015 (end-2014: 1,223%).

RATING SENSITIVITIES

NATIONAL RATINGS
Upward rating potential is limited given that the capital market in Indonesia is still evolving, and the weaker regulatory and operating environment in the brokerage sector compared with the banking industry. The Indonesian capital market is susceptible to external shocks and securities firms are generally reliant on wholesale short-term funding.

Downward pressure may arise from a material increase in risk appetite, such as overly aggressive proprietary trading and margin financing or significant weakening of capitalisation and leverage, which could arise if the company was to invest significantly in new business ventures.