Fitch drops Indonesian banks' outlooks to stable

Fitch Ratings said it revised the outlook for nine Indonesian banks to stable from positive and affirmed all of the banks' ratings following a revision of Indonesia's outlook to stable from positive.

Banks affected include Bank Rakyat Indonesia, Bank Mandiri, Bank Central Asia, Bank Danamon Bank NISP, Bank Buana, Bank International Indonesia, Bank Negara Indonesia and Bank Niaga, all of which have a BB- long-term foreign currency issuer default rating and B short-term foreign currency issuer default rating.

Fitch said it believes that the more challenging operating conditions in Indonesia in the near term, particularly the higher interest rates, will likely have an impact on the asset quality and profitability of the banks.

However, the overall low level of system leverage and the cushion provided by the banks' high net interest margin, fairly strong capital positions and more diversified loan books are generally adequate mitigating factors, the agency said. Additionally, several of the banks are now owned by foreign financial institutions, whose stronger technical and financial resources and better standards of corporate governance should be favorable for the banks' operational development.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.