OREANDA-NEWS. Fitch Ratings Indonesia has affirmed the National Ratings of four foreign-owned banks in Indonesia:
- PT Bank CIMB Niaga Tbk (CIMB Niaga),
- PT Bank Maybank Indonesia Tbk (Maybank Indonesia),
- PT Bank OCBC NISP Tbk (OCBC NISP), and
- PT Bank UOB Indonesia (UOBI).

At the same time, Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer Default Ratings (IDRs) of CIMB Niaga, Maybank Indonesia and OCBC NISP. A full list of rating actions is at the end of this rating action commentary.

'AAA' Long-Term National Ratings denote the highest rating assigned by Fitch on 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.

'AA' National Long-Term 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.

The affirmation of the IDRs and National Long-Term Ratings reflects strong parental support and linkage for the four banks. The affirmation of the Viability Ratings (VRs) on CIMB Niaga, Maybank Indonesia and OCBC NISP reflect the banks' moderate franchises and broadly stable standalone credit profiles that are underpinned by ordinary support from their parents.

KEY RATING DRIVERS

IDRs, National Ratings and Support Ratings
The IDRs, Support Ratings and National Ratings on the four banks reflect Fitch's view that each bank's higher-rated foreign parent has the ability and high propensity to provide timely support to its subsidiary, if needed. The Long-Term Foreign-Currency IDRs are constrained by Indonesia's Country Ceiling of 'BBB'.

Fitch's view of support is reinforced by the growing strategic importance of these Indonesian subsidiaries to the parents' Asian franchises, the parents' majority ownership or control and a high level of integration with their parents. CIMB Niaga is owned by Malaysia-based CIMB Group Holdings Bhd and Maybank Indonesia is owned by Malayan Banking Berhad (Maybank; A-/Negative). OCBC NISP and UOBI are majority owned by Singapore-based Oversea-Chinese Banking Corp (OCBC; AA-/Stable) and United Overseas Bank Limited (UOB; AA-/Stable), respectively.

Viability Ratings
The 'bb' VRs of CIMB Niaga and Maybank Indonesia reflect their medium franchises and satisfactory capitalisation. It also takes into account their weaker asset quality, as reflected in their higher non-performing loan (NPL) and special mention loan (SML) ratios, and lower profitability (return on average assets) compared to their peers. The 'bb' VR of OCBC NISP takes into account its better capital position, as reflected in its higher capitalisation ratios, and stronger asset quality due to stricter credit risk management (as reflected in its below-industry average NPL and SML ratios), compared to CIMB Niaga and Maybank Indonesia, despite its smaller franchise.

Debt Ratings
The ratings of the banks' rupiah-denominated senior bonds and bond programmes are the same as their National Long-Term and Short-Term Ratings in accordance with Fitch Ratings Criteria.

Fitch rates the legacy subordinated debts of CIMB Niaga, Maybank Indonesia and OCBC NISP, and Basel III-compliant subordinated debts for Maybank Indonesia and UOBI. The legacy subordinated debts were rated one notch down from the issuer's anchor rating (National Long-Term Ratings in case of support-driven Indonesia subsidiaries) for loss severity, and an another one notch down for non-performance risk, mainly to account for the bonds' deferral features. Fitch applies the same notching approach for Basel III-compliant subordinated debts, which share the similar deferral features. The notching for non-performance risk is only one instead of more common two as the non-performance is partly neutralised by potential parental support.

RATING SENSITIVITIES

IDRs, National and Support Ratings
Upside potential for the banks' IDRs may result from an upgrade of the Indonesian Country Ceiling, but only if the parents' ratings remain above Indonesia's Country Ceiling. Support ratings are likely to remain unchanged unless there are multiple-notch changes in their parents' IDRs. There is no rating upside for the National Ratings as they are already at the top end of the scale.

Downward rating pressure may arise from any developments leading to a weakening of perceived support from their parents, such as major changes to ownership or a significant weakening in their parents' financial ability, although Fitch believes this to be a remote prospect in the near to medium term. The banks' IDRs are sensitive to changes in the parents' ratings. Deterioration in the banks' standalone financial profiles is unlikely to impact their IDRs and National Rating unless the factors underpinning support from their parents also weaken.

Viability Ratings
Rating upside on the banks' VRs may result if their franchises grow to be more comparable to the major Indonesian banks', while they maintain healthy risk-adjusted profitability, high core capitalisation, predominantly low-cost deposit-funded balance sheets and sound asset quality. Rating downside may result from further deterioration in asset quality leading to weaker capitalisation, and/or marked weakening in their liquidity profiles, particularly if the economic environment were to deteriorate further.

Debt Ratings
Any changes in the banks' National Long-Term and Short-Term Ratings would affect these ratings on their debt issues.

FULL LIST OF RATING ACTIONS:

CIMB Niaga
Long-Term Foreign-Currency IDR affirmed at 'BBB', Outlook Stable
Short-Term Foreign-Currency IDR affirmed at 'F3'
Viability Rating affirmed at 'bb'
Support Rating affirmed at '2'
National Long-Term Rating affirmed at 'AAA(idn)', Outlook Stable
National Short-Term rating affirmed at 'F1+(idn)'
Rupiah subordinated bonds I and II 2010 affirmed at 'AA(idn)'
Rupiah senior bond tranches under programme I 2012 affirmed at 'AAA(idn)'

Maybank Indonesia
Long-Term Foreign-Currency IDR affirmed at 'BBB', Outlook Stable
Short-Term Foreign-Currency IDR affirmed at 'F3'
Viability Rating affirmed at 'bb'
Support Rating affirmed at '2'
National Long-Term Rating affirmed at 'AAA(idn)', Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Rupiah subordinated bond I 2011 affirmed at 'AA(idn)'
Rupiah senior debt tranches under programme I/2011 affirmed at 'AAA(idn)'
Rupiah subordinated debt tranches under programme I/2011 affirmed at 'AA(idn)'
Rupiah sharia senior debt programme I/2014 and tranches under the programme affirmed at 'AAA(idn)'
Basel III compliant rupiah subordinated debt programme I/2014 and tranches under the programme affirmed at 'AA(idn)'

OCBC NISP
Long-Term Foreign-Currency IDRs affirmed at 'BBB'; Outlook Stable
Long-Term Local-Currency IDRs affirmed 'A-'; Outlook Stable
Short-Term Foreign-Currency IDR affirmed at 'F3'
Viability Rating affirmed at 'bb'
Support Rating affirmed at '2'
National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Rupiah senior bond tranches under programme I/2012 affirmed at 'AAA(idn)'
Rupiah subordinated bond III/2010 affirmed at 'AA(idn)'

UOBI
National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Basel III compliant rupiah subordinated bond I/2014 affirmed at 'AA(idn)'
Rupiah senior bond I/2015 affirmed at 'AAA(idn)' and 'F1+(idn)'.