Bank Permata's Services

Singapore (TheInsiderStories) – Moody’s Investors Service has affirmed Bank Permata Tbk (P.T.)’ long-term local and foreign currency deposit ratings of Baa3, as well as its Adjusted Baseline Credit Assessment (Adj. BCA) of ba1. At the same time, Moody’s has upgraded the bank’ BCA to ba1 from ba2.

The outlook on all long-term ratings, where applicable, is stable.


Bank Permata’s standalone credit profile has improved, mainly driven by the improvement in its asset quality. At the same time, Moody’s expects a lower level of support from one of its key shareholders, Standard Chartered Bank (SCB, A1 stable), following the global lender’s intention to divest its stake in Bank Permata.

Moody’s has therefore upgraded the bank’ BCA and removed the rating uplift associated with affiliate support. The offsetting effect of these actions leads to the affirmation of the bank’ Adjusted BCA and long-term deposit ratings.

The long-term deposit ratings incorporate a one-notch uplift, based on Moody’s assessment that the bank will receive support from the Government of Indonesia (Baa2
stable) in times of need.

Bank Permata‘ asset quality has improved since 2017, following a series of nonperforming loan (NPL) sales, loan write-offs and the active restructuring of distressed accounts. In addition, the resumption of loan growth in late 2017 led to a further decline in the problem loan ratio — which Moody’s defines as NPL and performing restructured loans over total gross loans — to 12.8 percent as of Dec. 31 from 16.3 percent the year before.

The provision coverage ratio of 176 percent at Dec. 31, 2018 was also strong. Moody’s expects the bank’s asset quality to improve further over the next 12 to 18 months, supported by a stable operating environment.

Despite tighter liquidity conditions since the second half of 2018, Bank Permata‘ funding costs remained stable, because of active
asset-liability management. Consequently, the bank’s net interest margin was stable in 2018 compared to 2017. Credit costs as a percentage of average gross loans also declined further to 1.7 percent in 2018 from 3.2 percent in 2017.

Moody’s says that over the next 12 to 18 months, the bank’ profitability should be supported by the recovery in interest income and the normalization of credit costs. Bank Permata’s Common Equity Tier 1 (CET-1) ratio increased to 17.8 percent at the end
of 2018 from 15.5 percent the year before, because of the recent
divestment of its multi-finance subsidiary.

While the bank’ capital position is strong, it will likely moderate
based on Moody’s expectation that the bank’s loan growth will outpace its improving, but still weak, internal capital generation.

Bank Permata‘ loan-to-deposit ratio increased to 89.1 percent as of Dec. 31 from 86.5 percent the year before, because of the tighter liquidity conditions. The bank is more susceptible to tightening liquidity conditions, because its deposit franchise is modest by Indonesian standards. At Dec. 31, the lender’ deposit market share stood at 2.1 percent, with a low-cost current account and savings account ratio of 48.2 percent.

Moody’s has also lowered the assumption of affiliate support from SCB to Bank Permata to “Low” from “Moderate”, to align with SCB’s intention to fully divest its investment in Bank Permata. The bank’ ratings therefore no longer benefit from any rating uplift due to shareholder support from SCB.

Bank Permata’ ratings also do not incorporate any affiliate support from the other key shareholder, PT Astra International Tbk (IDX: ASII), given the uncertainty over the Indonesian conglomerate’s long-term relationship with the bank in the context of SCB’ plans.

Moody’s says that the Indonesian government will likely provide a “High” level of support to Bank Permata in the event of a systemic crisis. This view is predicated on the bank’s position as one of the mid-sized banks in Indonesia by total assets, as well as the strong propensity of the Indonesian government to support the banking system in times of crisis.

The anticipation of government support leads to a one-notch uplift to the bank’ deposit ratings from Bank Permata’s adjusted BCA of ba1.


Moody’s could upgrade the bank’ BCA and ratings if its asset quality
improves further. Higher profitability because of an expansion in net
interest margin could also exert upward pressure on the BCA and ratings.

The acquisition of a substantial stake in Bank Permata by a stronger
domestic or international bank could lead to an upgrade of affiliate
support and rating uplift of the Adjusted BCA and ratings. Moody’s could downgrade the bank’s BCA and ratings if Bank Permata’ asset quality or capitalization deteriorates.

Headquartered in Jakarta, Bank Permata Tbk (P.T.) reported total assets of Rp152.9 trillion ($10.6 billion) at Dec. 31, 2018.

US$1: Rp14,424.5

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