Fitch Affirms BCA Finance 'AA+

SINGAPORE, KOMPAS.com - Fitch Ratings has affirmed PT BCA Finance's ratings at National Long-Term 'AA+' and Short-Term 'F1+'. The Outlook is Stable.

At the same time, Fitch has affirmed BCAF's rupiah-denominated medium-term notes II/2010, senior bond III/2010, and senior bond IV/2011 at 'AA+' and its subordinated bond without deferral clauses I/2010 at 'AA'.

The ratings reflect BCAF's strong support and linkage with its shareholder, PT Bank Central Asia Tbk (BCA; 'BB+'/Positive). BCA is Indonesia's third-largest bank by assets and a leading transactional bank.

BCAF's National Long-Term rating is a notch below its parent's National Long-Term rating of 'AAA(idn)', reflecting its strategic importance to the group as well as strong support and commitment from BCA. BCA's support is manifested in the common brand name it shares with BCAF, the provision of funding and operational alignment.

Fitch notes that funding support from BCA helps underpin BCAF's ability to offer competitive lending rates. Fitch expects funding support to continue to rise in line with BCAF's loan expansion. Any changes in support from its parent, BCA, are likely to lead to changes to BCAF's National Rating.

BCAF's underlying profitability remains strong and above its peers', despite its pre-tax return on assets moderating to 23% in H111 from 29% in 2010 due to lower lending yield as a result of tight competition.

BCAF's H111 financial performance was underpinned by income accretion from a proportionately larger loan portfolio, strong contribution from non-interest income, well-managed operating expenses and low credit cost due to continued sound asset quality.

Fitch expects earnings to remain satisfactory due to low cost of funding; benchmark interest rates are expected to remain low until H112, while car demand in Indonesia is likely to remain strong.

Fitch notes that BCAF's asset quality remained solid with non performing loans (receivables more than 90 days overdue) at a low 0.3% of total net managed receivables at end-H111. BCAF's strong asset quality is underpinned by its focus on new loan with high downpayments (average downpayment of 29% in H111) and continued close monitoring of instalment payments.

As a result, the agency expects loan quality to remain manageable in 2012. Established in 1981, BCAF is one of the largest finance companies in Indonesia, with a focus on car financing.