TEXT Fitch Rates UOBI AAA idn Outlook Stable

Post on: 2011-11-02 By: admin

(The following was released by the rating agency)
JAKARTA/TAIPEI/SINGAPORE, November 01 (Fitch) Fitch Ratings
has assigned PT Bank UOB Indonesia (UOBI) a National Long-Term
'AAA(idn)' Rating with a Stable Outlook.
The rating reflects strong support and commitment from
UOBI's parent, the United Overseas Bank (UOB; 'AA-'/Stable),
given the latter's 99% ownership of the subsidiary. UOBI's
strategic importance to UOB is illustrated in the common brand
name, and operational alignment in key areas with the group,
including risk management and IT services. Any change in support
from its parent, UOB, would have an impact on UOBI's ratings, as
would significant changes in UOB's financial performance.
UOBI is the product of a merger between PT Bank UOB Buana -
a bank that focused on the small and medium sized enterprises
with a strong retail customer base (niche Chinese merchants) and
PT Bank UOB Indonesia, a joint venture bank established by UOB
Ltd Singapore (99%) and local investors, which has a strong
franchise in corporate banking.
UOBI's asset quality is sound, with the non-performing loans
(NPL) ratio declining to 2.02% at end-H111 from 2.78% at
end-2010. Its strong asset quality is underpinned by strict
lending criteria and strong account management, which is in line
with the parent's.
UOBI has strong capitalization with Tier 1 and total capital
adequacy ratio (CAR) of 18.27% and 19.27%, respectively at
end-H111. UOBI's total CAR was higher than the industry average
of 17.4% and the regulatory minimum requirement of 8%.
UOBI's profitability decreased slightly in H111 with a lower
net interest margin of 5.1% (2010: 5.7%) due to tight
competition in lending and deposit taking. This resulted in the
return on assets falling to 2% at end-H111 (2010: 2.4%).
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