PT BANK QNB INDONESIA TBK
Fitch Ratings Indonesia has affirmed
The Outlook is Stable. The rating on the bank's senior unsecured bonds has also been affirmed at '
'
Key Rating Drivers
Support-Driven Rating: QNB Indonesia's National Long-Term Rating is support-driven and reflects Fitch's expectation that the bank's higher-rated parent,
Linked to Parent's IDR: QNB Indonesia's rating is credit-linked to its parent's Long-Term Issuer Default Rating (IDR), as we believe support would flow from the Qatari sovereign to its Indonesian subsidiary through QNB, if necessary. Our view is based on QNB Indonesia's high importance to QNB group's overseas expansion strategy. QNB's IDRs are in turn driven by Fitch's expectation of the
High Ability to Support: Fitch believes QNB has high ability to provide support to its Indonesian subsidiary as it has a high credit rating and QNB Indonesia's assets accounted for less than 1% of QNB's total consolidated assets at end-2021.
Sole Subsidiary in
Strong Linkages with Parent: Our assessment of the parent's high propensity to extend support is also based on the synergy between the two entities, shown in their high alignment in key areas, including product and services, operations, risk management and key personnel, as well as the provision of funding and capital support, shared names and brands, and the parent's majority ownership. The parent's reputation will be damaged if the subsidiary was to default.
Weak Standalone Credit Profile: QNB Indonesia's National Long-Term Rating is not driven by its weak standalone credit profile, which is constrained by its small franchise, above-average risk appetite as well as weak asset quality and profitability measures, which we expect to persist in the near term. The bank benefits from ordinary support from QNB, which results in an adequate capitalisation and funding profile. We do not expect QNB Indonesia's ratings to be driven by its standalone credit profile in the foreseeable future.
QNB Indonesia's net losses continued to end-2021, driven by higher impairment charges and weak loan growth. The bank's restructured loans remained above 40% of total loans from
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
National Rating Relativity: A downgrade of QNB Indonesia's National Long-Term Rating would be likely to arise from a weakening in its overall credit profile relative to the universe of entities rated on the Indonesian National Rating scale. This could result from a two-notch downgrade of QNB's Long-Term IDR or a reduction in its propensity to provide support.
Parent's Weaker Propensity to Support: The ratings may be downgraded upon a material weakening in QNB's propensity to support its subsidiary - perceived or real - that could stem from a major change in ownership (such as a decline to below 50%), or prolonged weak performance and poor asset quality that significantly affects QNB's business prospect in
A downgrade could also occur if we believe that support from the Qatari government is less likely to flow to QNB Indonesia. This would lead us to link the subsidiary's rating to QNB's 'bbb+' Viability Rating rather than the 'A' Long -Term IDR. However, Fitch believes these prospects are unlikely in the near to medium term.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
No Upside: There is no rating upside for QNB Indonesia's National Rating as it is already at the highest point on the scale.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
QNB Indonesia's rupiah-denominated senior unsecured bonds are rated at the same level as the bank's National Long-Term Rating, in accordance with Fitch's criteria, as the bonds represent the bank's direct, senior unsecured obligations and rank equally with all its other senior unsecured obligations. We believe the bonds have average recovery prospects and
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Any downgrade of QNB Indonesia's National Long-Term Rating would lead to a corresponding downgrade of the bank's senior debt and issuance ratings.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Positive rating action for the senior debt is not possible as the rating is already at the highest point on the National Rating scale.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
QNB Indonesia's support-driven National Long-Term Rating is credit-linked to the parent's Long-Term IDR, based on our expectation that extraordinary support will flow from the Qatari sovereign through QNB.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl LT
Affirmed
senior unsecured
Natl LT
Affirmed
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