Fitch Affirms Bank Maybank Indonesia and Finance Subsidiaries

How Channel Finance Can Facilitate the Supply Chain | FinSMEsFitch Ratings – Sydney/Jakarta – 11 May 2020: Fitch Ratings has affirmed PT Bank Maybank Indonesia Tbk’s (Maybank Indonesia) Long-Term Issuer Default Rating (IDR) at ‘BBB’. The bank’s other international ratings have also been affirmed. At the same time, Fitch Ratings Indonesia has affirmed the National Long-Term Rating on Maybank Indonesia at ‘AAA(idn)’, and the National Long-Term Ratings on its financing subsidiaries PT Maybank Indonesia Finance (MIF) and PT Wahana Ottomitra Multiartha Tbk (WOMF) at ‘AA+(idn)’ and ‘AA-(idn)’, respectively. The Outlooks are Stable.

Fitch expects the standalone performance of Indonesia’s banks, including Maybank Indonesia, to deteriorate in the short term as the coronavirus pandemic leads to weaker economic growth and business activity stemming from trade disruption, lower manufacturing output, and diminished consumer confidence and spending. This will pressure banks’ asset quality, profitability and credit growth. Fitch has revised its operating environment score for Indonesia’s banks to ‘bb+’, from ‘bbb-‘ reflecting these risks. Please refer to “Fitch Ratings: Coronavirus Pandemic Weakens Operating Environment for Indonesian Banks”, published on 24 March 2020 at, for further details.

‘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.

‘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.

The IDRs and National Ratings on Maybank Indonesia are support-driven, reflecting Fitch’s expectation that the bank would be highly likely to receive extraordinary support from its higher-rated Malaysia-based parent, Malayan Banking Berhad (Maybank, BBB+/Stable/bbb+), if needed. Maybank Indonesia’s Long-Term IDR is notched from its parent’s Viability Rating.

Our view of support is based on Maybank Indonesia’s strategic importance to Maybank’s franchise in south-east Asia – the subsidiary provides its parent a foothold in Indonesia, which offers high growth potential. We believe that a default by Maybank Indonesia would result in high reputational damage to the parent and we expect Maybank to maintain a significant degree of management control over Maybank Indonesia in the medium term. Our assessment also takes into account alignment between parent and subsidiary in most key areas such as risk management, operations and appointment of key personnel, shared branding, and Maybank’s majority 79%-ownership. Fitch believes Maybank has considerable ability to support its Indonesian subsidiary. Maybank Indonesia’s assets accounted for around 6% of its parent’s consolidated assets at end-2019.


Maybank Indonesia’s Viability Rating reflects its medium franchise and moderate financial profile. The bank’s asset quality and profitability will come under pressure as a result of the coronavirus pandemic but its moderate capitalisation and a funding and liquidity profile that benefits from ordinary parental support should help to limit the impact on its financial position.

Maybank Indonesia was the 11th-largest bank in Indonesia with a 2.0% share of the banking industry’s assets at end-2019. The bank’s loan portfolio is split with relatively equal proportions of corporate (19% of loans), commercial (17%), SME (16%), consumer (28%) and sharia financing (20%).

Asset quality will come under near-term coronavirus-related pressure as borrower repayment capacity is challenged and credit growth slows. This will result in an increase in non-performing, “special-mention” and restructured loans. We have lowered Maybank Indonesia’s asset quality factor mid-point to ‘bb-‘ from ‘bb’ as a result and assigned a negative outlook on the factor, reflecting the downside risk to asset quality should economic deterioration be worse than in our base case. The non-performing loan (NPL) ratio (loans overdue more than 90 days) of 3.2% at end-2019 (end-2018: 2.5%) was higher than the industry’s 2.5%. Its “special-mention” loan ratio of 4.2% (2018: 4.2%) was below the system’s 5.1% but loan loss allowances for NPLs at 65% (2018: 69%) were significantly lower than the sector average of 116%.

Maybank Indonesia’s profitability will be affected by higher credit costs as loan quality worsens, which has led us to lower the profitability and earnings mid-point to ‘bb-‘ from ‘bb’. We have assigned a negative outlook on the factor, also reflecting downside risks. Its operating profit/risk weighted assets ratio was stable at 2.1% at end-2019 (2018: 2.2%), although lower than the industry average of around 3.3%.

Fitch believes that Maybank Indonesia’s capital buffers should be adequate in the near term to withstand higher risk-weighted assets and weaker earnings due to coronavirus. The introduction of the IFRS 9 accounting standard in Indonesia from January 2020 will also put pressure on the bank’s capitalisation ratios. However, we believe that the impact will be manageable for Maybank Indonesia and we have maintained the capitalisation and leverage mid-point score at ‘bb+’. We have assigned a negative outlook on the factor, reflecting a heightened risk of capital impairment if asset quality and profitability deterioration turns out to be worse than our base case. The bank’s common equity Tier 1 (CET1) capital ratio rose to 19.5% by end-2019 (2018: 16.9%), although it was still below the 21.9% sector average.

Fitch expects Maybank Indonesia’s funding and liquidity to remain stable in the near to medium term, helped by ordinary support from its parent, if necessary. We have maintained its mid-point score at ‘bb’ with a stable outlook. Customer deposits, at around 82% of interest-bearing liabilities, continue to be the bank’s main funding source. However, the loans/deposits ratio of 111% was still much higher than the industry’s 94%. The bank’s liquidity coverage and net stable funding ratios of 146% and 107%, respectively, were above its minimum requirement of 100%.


The National Ratings of MIF reflect Fitch’s high expectation that extraordinary support will be provided to the subsidiary from its parent and, if necessary, ultimate parent Maybank, in the event of need. We believe that MIF plays a strategic role in supporting its parent’s business expansion in Indonesia’s consumer-financing market. Parental support is manifested in name sharing, operational integration, funding provision, and full ownership.

WOMF’s rating reflects Fitch’s expectation of a moderate probability of extraordinary support from Maybank Indonesia and ultimate parent, Maybank, if required. The rating takes into account our belief that WOMF is of limited importance to the parent, as reflected in modest integration, different branding, WOMF’s limited contribution to the group and our view that the company remains a potential candidate for sale.


Fitch rates the Basel III-compliant subordinated debt of Maybank Indonesia two notches down from its anchor rating, which is the support-driven National Long-Term Rating. This comprises one notch for loss severity, reflecting their subordinated status, and one notch for non-performance risk, mainly to account for the bonds’ interest and/or principal deferral features. Notching for non-performance risk is only one notch, instead of the more common two, as the risk of non-performance is partly neutralised by potential parental support.

The ratings on MIF’s and WOMF’s rupiah senior bond programmes and bond issuance are the same as their National Long-Term Ratings, in accordance with Fitch’s criteria, as the bonds represent the companies’ direct, senior obligations and rank equally with all their other senior obligations.



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

A downgrade of the parent’s Viability Rating would lead to a downgrade of Maybank Indonesia’s Long-Term IDR and National Long-Term Rating. Maybank Indonesia’s Support Rating of ‘2’ would be affected in the event of a two-notch downgrade of its parent’s Viability Rating. Downward rating pressure could also arise from any developments leading to a perceived weakening propensity of support from Maybank, such as major changes to ownership, although Fitch believes that this is unlikely in the near to medium term given the importance of Maybank Indonesia to Maybank’s regional franchise. Deterioration in Maybank Indonesia’s standalone credit profile is unlikely to affect its IDRs or National Ratings unless the factors underpinning parental support also weaken.

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

Upside potential for Maybank Indonesia’s Long-Term IDR would only be possible in the event of an upgrade of Indonesia’s Country Ceiling and if Fitch views its parent’s ability and/or propensity to provide support to have increased. There is no rating upside for Maybank Indonesia’s National Ratings as they are already at the highest point on the scale.


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

A VR downgrade could stem from a significantly greater coronavirus-related deterioration in Maybank Indonesia’s financial position than Fitch currently expects. Significantly weaker asset quality, as likely to be reflected in asset-quality metrics – including non-performing, “special-mention” and restructured loan ratios – that deteriorate by more than we expect under our base case, would lead us to lower the asset quality mid-point score. Considerably weaker profitability, such that its four-year average operating profit/risk weighted asset ratio falls below 1.25% would pressure the bank’s earnings and profitability mid-point score. An increased risk of capital impairment, such that the CET1 ratio is sustained below 17%, would lead us to lower the capitalisation and leverage mid-point score. Any combination of the above could lead us to downgrade the VR. Negative rating action could also be triggered by a prolonged and severe economic disruption from the coronavirus pandemic.

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

Positive rating action is unlikely in the near term considering current operating conditions and prospects. Evidence of lower risk appetite, including more consistent underwriting standards and stronger risk controls – likely reflected in better and more stable asset quality – could lead to an upgrade. Replenishment of loss-absorption buffers to pre-pandemic and IFRS 9 implementation levels, such as those as of end-2019, would be positive for the rating. Rating upside could also result from a significantly stronger franchise, such that it is more comparable with those of major Indonesian banks, while maintaining its moderate financial profile, although Fitch believes this is a remote prospect in the near to medium term.


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

A downgrade of Maybank Indonesia’s rating would result in a downgrade of the ratings on MIF and WOMF. Any significant decline in ownership by or perceived weakening of support from the parent and ultimate parent would pressure the subsidiaries’ ratings, including the possibility of a multi-notch downgrade of their National Long-Term Ratings. However, Fitch sees this prospect as remote for MIF in light of its importance to the parent’s consumer business. A significant sustained weakening of the subsidiaries’ contributions to the parent, leading to a reassessment of the importance of the business, would also exert rating pressure.

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

Rating upside for MIF could arise if Maybank Indonesia’s Long-Term IDR was upgraded or if Fitch were to perceive it as a core subsidiary of Maybank Indonesia. Evidence of stronger operational integration between parent and subsidiary would likely result in an equalisation of MIF’s ratings with its parent’s National Ratings.

The rating differential between Maybank Indonesia and WOMF could narrow if Fitch views WOMF to have become more important to the Maybank group’s long-term strategy and it is unlikely to be sold. Evidence of WOMF’s greater importance may include closer operational integration with the subsidiary, the parent providing other forms of tangible support to the company, or sharing its name with WOMF.


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

A downgrade of the issuers’ National Long-Term Ratings would result in a downgrade of the ratings on their debt programmes and issuance.

A downgrade of Maybank Indonesia’s subordinated debt could also result from a widening of the notching on these securities following an update to Fitch’s Bank Rating Criteria on 28 February 2020. Fitch intends to review the notching on national ratings assigned to Indonesian banks’ Tier 2 debt issuance by end-August 2020 at the latest. Please refer to “Fitch Ratings to Review Indonesian National Ratings Assigned to Tier 2 Debt”, published on 12 March 2020 at, for further details.

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

An upgrade of the issuers’ National Long-Term Ratings would lead to a corresponding upgrade of the ratings on their debt programmes and issuance.


International scale credit ratings of Financial Institutions issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit


The principal sources of information used in the analysis are described in the Applicable Criteria.


The IDRs and National Ratings on PT Bank Maybank Indonesia Tbk are directly linked to the Viability Rating of Malayan Bank Berhad (bbb+) based on our view of potential extraordinary support. The finance subsidiaries’ ratings are linked to the rating on parent Maybank Indonesia.


The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). For more information on Fitch’s ESG Relevance Scores, visit

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