PT WAHANA OTTOMITRA MULTIARTHA TBK
Fitch Ratings Indonesia has upgraded
The Outlook is Stable. The upgrade reflects our view of a higher probability of extraordinary support from its largest shareholder, if needed, and a lower likelihood that the parent will sell its stake in WOMF. Fitch has also affirmed WOMF's National Short-Term Rating at 'F1+(idn)' and upgraded the ratings on the local-currency issues to 'AA(idn)' from '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.
Key Rating Drivers
Lower Likelihood of Disposal: Our rating upgrade reflects Fitch's view of a stronger propensity for support from the 67.5% shareholder,
WOMF contributed 11% of Maybank Indonesia's net profit in 9M22 (2021: 7%; average 2017-9M22: 10%). WOMF's net profit contribution has improved against the 3% average during 2012-2016.
Constraining Factors for Support: We believe WOMF's strategic importance to the parent is limited by its exposure to riskier borrower segments, its small overall contribution compared to its sister company, PT Maybank Indonesia Finance (MIF,
Motorcycle and Vehicle-Refinancing Business: WOMF mainly finances new motorcycles and used-vehicles, contributing to the parent's consumer financing business. Maybank Indonesia is the country's 13th largest bank in 9M22, and is part of the Maybank group, headquartered in
Modest Standalone Profile: WOMF's standalone credit profile does not directly drive its ratings, but reflects its modest franchise and exposure to riskier borrower segments, which makes is asset quality and profitability more vulnerable to economic cycles. Its average non-performing financing (NPF) ratio of 2.2% during 2017-9M22 is lower than the average NPF ratio of 2.9% over 2014-2016. WOMF's average pretax income/average assets of 3.3% during 2017-9M22 has also improved against an average of 0.6% during 2014-2016.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Any weakening in our assessment of Maybank Indonesia's overall credit profile, as indicated by its National Long-Term Rating, could lead to corresponding negative action on WOMF's rating.
WOMF's National Long-Term Rating could be downgraded if Fitch believes that Maybank Indonesia's propensity to provide support to the company has declined. This could be due to renewed attempts by the bank to reduce its holdings in the subsidiary - even partially - or a perceived decline in WOMF's importance to its parent, perhaps due to sustained weak performance that diminishes its contribution to Maybank Indonesia's profitability.
The National Short-Term Rating could be downgraded in the event of a two, or more, notch downgrade in the National Long-Term Rating.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Fitch may take further positive rating action if there is evidence that WOMF has become even more important to Maybank Indonesia's domestic franchise. This may be driven by a substantially larger financial contribution to the group, broader synergies with the Maybank group, closer strategic and operational integration between WOMF and its parent bank, or the parent sharing its name with WOMF.
There is no upside to WOMF's National Short-Term Rating, as it is already at the highest end of the national scale.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
WOMF'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
Any change in WOMF's National Long-Term Rating would lead to corresponding action on its instrument ratings.
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
WOMF's ratings are driven by Fitch's expectation of extraordinary support from its major shareholder, Maybank Indonesia.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl LT
AA(idn)
Upgrade
AA-(idn)
Natl ST
F1+(idn)
Affirmed
F1+(idn)
senior unsecured
Natl LT
AA(idn)
Upgrade
AA-(idn)
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
(C) 2022 Electronic News Publishing, source
