PT BANK MAYBANK INDONESIA TBK
Fitch Ratings Indonesia has affirmed
The Outlook is Stable. Fitch has also affirmed the bank's National Short-Term Rating at 'F1+(idn)' and the issue rating on the rupiah-denominated subordinated bonds at 'AA(idn)'.
'
'AA' National Long-Term 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.
'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.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl LT
Affirmed
Natl ST
F1+(idn)
Affirmed
F1+(idn)
subordinated
Natl LT
AA(idn)
Affirmed
AA(idn)
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Key Rating Drivers
Support-Driven Ratings: Maybank Indonesia's National Ratings are support-driven and reflect our expectation that the bank's
Anchored to Parent's SCP: The National Ratings are driven by Fitch's assessment of Maybank's standalone credit profile (SCP), as we believe there is uncertainty as to whether extraordinary support, if required, would flow from the Malaysian government through Maybank to Maybank Indonesia. Potential support would most likely come from Maybank's own financial resources, in Fitch's view.
Strong Ability to Support: Maybank has a strong ability to provide support to its Indonesian subsidiary as reflected in its standalone credit strength and Maybank Indonesia's small size compared to the parent. Maybank Indonesia's total assets accounted for around 5% of Maybank's consolidated assets as of
Integral Part of Parent's Business: Our assessment of extraordinary shareholder support also takes into consideration Maybank Indonesia's strategic importance to Maybank's franchise in the region. The subsidiary provides a presence in
We also incorporate the synergy between the parent and subsidiary as shown in the high alignment in product and services, operations, risk management, key personnel and shared name and branding. We believe a default by Maybank Indonesia would constitute high reputational damage to the parent.
Moderate Standalone Strength: Our view of Maybank Indonesia's standalone profile does not drive the rating. It reflects the bank's overall moderate business profile, a risk profile above the average of the largest Indonesian banks and weaker-than-peer asset quality and profitability. Counterbalancing these are satisfactory capitalisation and adequate funding and liquidity that benefit from ordinary shareholder support.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of the National Long-Term Rating could result from a weakening in the bank's overall credit profile relative to the national-rating universe of Indonesian rated entities. This could arise from a significant deterioration in our assessment of the parent's SCP.
Pressure to lower the ratings could also arise from a perceived weakening propensity of support from Maybank, such as major changes in ownership, although Fitch believes that this is unlikely in the near to medium term, given the importance of Maybank Indonesia to Maybank's regional franchise. Deterioration in Maybank Indonesia's SCP is unlikely to affect its National Ratings unless such deterioration resulted in a perceived weakening in parental propensity to support.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
There is no rating upside for Maybank Indonesia's National Ratings as they are already at the highest point on the scale.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Fitch rates the Basel III-compliant subordinated debt of Maybank Indonesia two notches down from the anchor rating, which is the support-driven National Long-Term Rating. Both notches are for loss severity to reflect their subordination and our view of the bonds' poor recovery prospects compared with senior unsecured obligations.
These Tier 2 debt instruments have an embedded permanent write-down feature (both principal and/or interest in full or in part) that can be triggered when the bank approaches its point of non-viability. The bonds also incorporate features that allow coupons and principal to be deferred and accumulated if the bank's capital position falls below its minimum requirements. However, notching for non-performance risk is zero, as we believe that non-performance is neutralised by potential parental support.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
A downgrade of Maybank Indonesia's National Long-Term Rating would lead to a corresponding rating action on its subordinated debt issues. A reassessment of loss severity or non-performance risk leading to a widening of notching would also result in a downgrade of the rating.
An upgrade of the rating on Maybank Indonesia's subordinated bonds would only be possible in the event that we narrowed the notching for loss severity on these instruments from Fitch's base case of two notches, which we believe is unlikely in the near to medium term.
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
Maybank Indonesia's rating is credit-linked to the parent's standalone credit profile based on our expectation of extraordinary support.
Additional information is available on www.fitchratings.com
(C) 2022 Electronic News Publishing, source
