Theindonesiatoday.com - Fitch Ratings has today affirmed PT Bank Muamalat Indonesia Tbk's (BMI) National Long-term rating at 'A(idn)' with stable outlook and its subordinated rupiah unsecured bonds issued in 2008 with no deferral clause at 'A-(idn)'. (source)
The ratings reflect BMI's satisfactory capitalisation and the government's modest propensity to support in case of need given the former's importance in the development of shariah banking in Indonesia. The ratings also reflect BMI's high, albeit improving, non-performing financing (NPF) and the latter's low reserve coverage.
In July 2010, the bank's shareholders injected additional capital of IDR673bn through a right issue, less than the IDR972bn the bank had expected. At end-2010, its total capital adequacy ratio (CAR) of 13.3% (Tier 1 CAR of 10.6%) was below sharia peers' 16.2% and the industry average of 17.2%.
Although sharia banking's market share is small at only around 2.7% at end-2010, it is likely to increase as Indonesia has the largest Muslim population in the world. As the oldest Islamic bank and the second-largest sharia-based bank in the country, some support from government, in case of need, is likely as BMI assets accounted for about 21.4% of the country's total Islamic bank assets at end-2010.
BMI's financing increased to IDR15.9bn at end-2010 from IDR11.5trn at end-2009 as the bank focused on retail financing (micro/SME businesses and consumers). The latter's share of the bank's total financing rose to 51% in 2010 from 43% in 2009, while corporate lending's share fell to 49% from 57%. Deposit concentration risk also fell, with the top 20 depositors at end-2010 representing about 21% of total deposits (2009: 33%).
NPF declined slightly to 4.3% of total financing at end-2010 from 4.7% in 2009, with corporate representing the largest share at about 81% of total NPF. Fitch believes that NPF is likely to improve slightly in 2011 on the back of a more positive economic outlook. Coverage remained weak at 41% of NPF at end-2010 compared with the industry's average of 150%.
Return on assets and equity stood at 0.9% and 12.9%, respectively, at end-2010 (2009: 0.4% and 5.4%), lower than rated Islamic bank peers mainly due to lower net interest margins (NIM) and higher operating costs. BMI's NIM fell to 4.7% at end-2010 (2009: 5%) as lower funding costs failed to offset a decline in lending rates resulting from keen competition.
BMI was established in 1991 as Indonesia's first Islamic bank. BMI's largest shareholder is Saudi Arabia-based Islamic Development Bank with a 32.84% interest at end-2010. (Theindonesiatoday.com)
In July 2010, the bank's shareholders injected additional capital of IDR673bn through a right issue, less than the IDR972bn the bank had expected. At end-2010, its total capital adequacy ratio (CAR) of 13.3% (Tier 1 CAR of 10.6%) was below sharia peers' 16.2% and the industry average of 17.2%.
Although sharia banking's market share is small at only around 2.7% at end-2010, it is likely to increase as Indonesia has the largest Muslim population in the world. As the oldest Islamic bank and the second-largest sharia-based bank in the country, some support from government, in case of need, is likely as BMI assets accounted for about 21.4% of the country's total Islamic bank assets at end-2010.
BMI's financing increased to IDR15.9bn at end-2010 from IDR11.5trn at end-2009 as the bank focused on retail financing (micro/SME businesses and consumers). The latter's share of the bank's total financing rose to 51% in 2010 from 43% in 2009, while corporate lending's share fell to 49% from 57%. Deposit concentration risk also fell, with the top 20 depositors at end-2010 representing about 21% of total deposits (2009: 33%).
NPF declined slightly to 4.3% of total financing at end-2010 from 4.7% in 2009, with corporate representing the largest share at about 81% of total NPF. Fitch believes that NPF is likely to improve slightly in 2011 on the back of a more positive economic outlook. Coverage remained weak at 41% of NPF at end-2010 compared with the industry's average of 150%.
Return on assets and equity stood at 0.9% and 12.9%, respectively, at end-2010 (2009: 0.4% and 5.4%), lower than rated Islamic bank peers mainly due to lower net interest margins (NIM) and higher operating costs. BMI's NIM fell to 4.7% at end-2010 (2009: 5%) as lower funding costs failed to offset a decline in lending rates resulting from keen competition.
BMI was established in 1991 as Indonesia's first Islamic bank. BMI's largest shareholder is Saudi Arabia-based Islamic Development Bank with a 32.84% interest at end-2010. (Theindonesiatoday.com)
Source : http://www.theindonesiatoday.com/finance/banking/11910-bank-muamalat-affirmed-27a28idn29272c-subordinated-bond-27a-28idn2927.html - June 28, 2011
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