Fitch Ratings Indonesia has upgraded PT Maybank Indonesia Finance's (MIF) National Long-Term Rating to 'AAA(idn)' from 'AA+(idn)'.

The Outlook is Stable. The upgrade reflects our view of a stronger likelihood of extraordinary support from its parent, if needed, than previously factored in the ratings. Fitch has also affirmed MIF's National Short-Term Rating at 'F1+(idn)' and upgraded the ratings on the local-currency issues to 'AAA(idn)' from 'AA+(idn)'.

'AAA' National Long-Term Ratings denote the highest rating assigned by the agency in 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 or monetary union.

'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.

Key Rating Drivers

Stronger Parental Propensity to Support: Our rating upgrade reflects Fitch's view of stronger support propensity from MIF's parent and sole shareholder, PT Bank Maybank Indonesia Tbk (AAA(idn)/Stable), and the ultimate parent, Malaysia-based Malayan Banking Bhd (Maybank). We believe that MIF plays a key role in underpinning the parent's performance, given its increasingly important profit contribution and stated role in the parent's growth strategy in consumer lending.

Synergistic Business Line: MIF handles the parent's new-car financing business, a key consumer financing business line identified as a growth driver by Maybank. MIF also refers its customers to open bank deposit accounts at Maybank Indonesia, increasing the synergies between MIF and Maybank Indonesia. Maybank Indonesia was the country's 13th largest bank in 9M22, and we assess its credit profile to be stronger than MIF's standalone credit profile.

Rising Profit Contribution: MIF's profit contribution to Maybank Indonesia has increased over the years, to a more significant 25% of net profit, on average, over 2019-9M22 (9M22: 29%; 2021: 23%) from around 17% over 2015-2018. MIF maintains positive profit contribution to the parent through economic cycles, and we expect this to continue because of its established franchise and performance record.

Funding Support and Other Links: The parent's willingness to provide ordinary support to MIF is also evident in the increasing provision of joint-financing funding, which contributed 73% of the subsidiary's total funding as of September 2022 (2021: 54%). Our view also reflects Maybank Indonesia's full ownership of the subsidiary, and common branding.

Acceptable Standalone Profile: MIF's standalone credit profile does not directly drive its ratings, but reflects its moderate franchise, stable asset quality and profitability, capitalisation above the sector average and a funding profile that benefits from ordinary parental support in the form of an off-balance-sheet joint-financing facility from Maybank Indonesia.

Rating Sensitivities

Factors that could, individually or collectively, lead to negative rating action/downgrade:

MIF's National Long-Term Rating is sensitive to a change in the ratings of Maybank Indonesia. Any negative action on Maybank Indonesia's rating would lead to similar action on MIF.

Weakening shareholder propensity to support MIF would also result in negative action on the National Long-Term Rating. This could result from a perceived decline in MIF's strategic importance to its parent, perhaps due to prolonged weakened performance, or a significant reduction in joint-financing funding - although we do not expect any such shifts in the near term.

The National Short-Term Rating would be resilient to a three-notch downgrade in the National Long-Term Rating.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

There is no upside to MIF's ratings, as they are already at the highest end of the national scale.

DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS

MIF's debt programmes and related bonds are rated at the same level as its National Long-Term Rating, as the instruments represent its direct, senior obligations and rank equally with all its other senior obligations.

DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES

There is no upside to MIF's issuance rating, as it is already at the highest end of the national scale.

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

MIF's ratings are driven by Fitch's view of a high probability of extraordinary support from the parent, Maybank Indonesia.

RATING ACTIONS

Entity / Debt

Rating

Prior

PT Maybank Indonesia Finance

Natl LT

AAA(idn)

Upgrade

AA+(idn)

Natl ST

F1+(idn)

Affirmed

F1+(idn)

senior unsecured

Natl LT

AAA(idn)

Upgrade

AA+(idn)

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VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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