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Bank Industry Risk Analysis: Indonesia
Standard & Poors, June 2000
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
Abstract
While the worst may be over for Indonesia's financial sector, its industry risk profile remains significantly high by international standards as a result of the mammoth overhang of nonperforming loans (NPLs), severe capital constraints, the fragile recovery in the country's economy, and regulatory forbearance. Furthermore, the near collapse of the banking system during the economic crisis exposed weaknesses not only in the financial profile of the private sector, but also in the area of bank supervision. All this means that it could take up to a decade for the banking industry to fully recover. With approximately 75%-85% of loans in the banking system classified as nonperforming at the end of 1999, inclusive of NPLs that are being managed by the...
Companies mentioned in this report are: Standard Chartered Bank,Indonesia (Republic of),PT Bank Permata Tbk,PT Bank Central Asia Tbk,PT Bank Rakyat Indonesia (Persero),PT Bank CIMB Niaga Tbk. (Unsolicited Ratings),PT Bank Pan Indonesia Tbk.,Bank Indonesia,PT Bank Negara Indonesia (Persero) Tbk.,PT Bank Mandiri (Persero)
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