Jun 26 2012
|more articles from|
Fitch Affirms Bank Muamalat Indonesia at 'A(idn)'
26 Jun 2012 3:05 AM (EDT) Fitch Ratings-Jakarta/Singapore-26 June 2012: Fitch Ratings has affirmed PT Bank Muamalat Indonesia Tbk's (BMI) National Long-Term Rating at 'A(idn)' with a Stable Outlook and its subordinated debt rating at 'BBB(idn)'.
BMI's ratings reflects Fitch's view of a limited probability of state support, given the bank's symbolic role in shari-banking development in Indonesia, while also recognising its small asset size relative to the domestic banking sector. Any perceived weakening in the government's propensity to provide timely extraordinary support to the bank would be negative for its ratings.
The subordinated debt rating is three notches below BMI's National Long-Term Rating, reflecting potential coupon deferral risk on subordinated debt of banks that are under intensive surveillance in Indonesia. Aggressive loan growth is a growing downside rating risk, especially if it results in asset quality deterioration and weaker capitalisation.
The bank's Tier 1 capital ratio was at the low end of the industry average, at 9.3% at end-2011 (end-2010: 10.6%). In Fitch's opinion, further capital injection is needed to continue to support the bank's high loan growth target, in view of its modest earnings profile.
In Fitch's view, BMI's financial profile would need to improve - with greater efforts possibly to widen margins and lower operating costs - before it is able to sustain high loan growth on its own. The bank's net interest margins narrowed to 4.8% in 2011 (2010: 5.2%), but its costs/income ratio eased to 66% (70%). Its return on assets improved slightly to 1% (0.9%) but was still well below the 3% banking industry average.
BMI was established in 1991 as Indonesia's first Islamic bank. BMI's largest shareholder is Islamic Development Bank with a 32.7% interest at end-2011. The bank accounted about 25% of total system sharia-banking assets in 2011 but only 1.1% of the domestic banking industry, including conventional banking assets.
+62 21 2902 6406
PT Fitch Ratings Indonesia
Level 20 Prudential Tower
Jl. Jend. Sudirman Kav.79
Jakarta, Indonesia 12910
+62 21 2902 6407
+886 2 8175 7601
Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: firstname.lastname@example.org.
© Press Release 2012
© Copyright Zawya. All Rights Reserved.