Fitch Assigns First-Time 'A+(idn)' Rating to Bank DKI
OREANDA-NEWS. Fitch Ratings Indonesia has assigned Jakarta-based regional development bank PT Bank DKI a National Long-Term Rating of 'A+(idn)' and National Short-Term Rating of 'F1(idn)'. The Outlook is Stable. At the same time, Fitch has assigned the bank a senior unsecured debt class rating of 'A+(idn)'.
'A' National Ratings denote expectations of low default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions may affect the capacity for timely repayment to a greater degree than is the case for financial commitments denoted by a higher rated category.
'F1' Short-Term National Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch'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
Bank DKI's National Long-Term Rating is support-driven and reflects Fitch's view that Bank DKI plays an important role in supporting economic growth in the Jakarta region, and in the policies and programmes of the Jakarta Special Regional Government (DKI). In general, Fitch expects potential, albeit limited, extraordinary support for regional development banks to ultimately come from the central government. Bank DKI is of lower systemic importance compared with large banks in Indonesia. In Fitch's view, lapses in corporate governance are most likely to be the triggers for Bank DKI to need extraordinary support.
Unlike other regional development banks, which are owned by a combination of regional governments and municipalities, DKI owns 99.97% of the bank. Ordinary parental support from DKI to the bank is evident from the annual capital injections DKI has made since 2012 to help fund the bank's growth. Bank DKI has increased its capital ratios in the last four years as a result and its Tier 1 capital ratio was 22.8% at end-2015, higher than the industry average of 19.0%. Fitch expects DKI to make further capital injections to support Bank DKI's growth plans during the current administration's term in office till 2017, although DKI's ability to provide extraordinary support in the event of need is less certain.
DEBT RATINGS
The ratings of the bank's rupiah-denominated senior unsecured debt class is the same as its National Long-Term Rating in accordance with Fitch criteria
RATING SENSITIVITIES
NATIONAL RATINGS
Bank DKI's National Ratings may be upgraded if Fitch reassesses the bank to be of greater strategic importance to the local economy and of higher systemic importance, which will be characterised by increasing market share in loans and deposits nationally and a more integral role in supporting regional economic development. However, in Fitch's view, it is unlikely that Bank DKI will be able to close the gap with larger banks in the short to medium term.
The ratings may also be upgraded if Fitch assesses the bank's standalone credit profile to be sufficiently strong to underpin the ratings rather than rely on potential sovereign support. However, material and sustained improvement in its financial profile will be subject to the degree of policy-related lending it may be required to undertake in the future.
Downward rating pressure may arise from a weakening of the central government's ability or propensity to provide extraordinary financial support to Bank DKI, with the latter likely to stem from the bank becoming less important to DKI in supporting the regional economy. However, Fitch believes this to be a remote prospect in the near to medium term. Deterioration in the bank's standalone financial profile is unlikely to impact its National Ratings given the support-driven nature of the ratings unless the deterioration results in the parent's diminished propensity to support the bank.
DEBT RATINGS
Any changes in the National Long-Term Rating would also impact the debt ratings to a similar extent.
Комментарии