Fitch Ratings assigned PT. Bank Pembangunan Daerah Jambi a national long-termrating of A(idn), with a stable outlook.
Fitch said Oct. 3 that the rating reflects the bank's strongfranchise in the province of Jambi, Indonesia, its vital role in the region'sdevelopment and strong support from its shareholders, which include thegovernment and various municipalities in the province.
The rating agency noted that strong support from theshareholders is indicated in annual capital injections since 2012. The bank'sFitch core capital and Tier 1 adequacy ratios were 25.8% and 23.1%,respectively, as of the end of June, higher than the industry Tier 1 average of20%.
The bank's asset quality will likely remain manageable as94% of its loan portfolio comprises lower risk loans.
Fitch noted that the bank has a high deposit concentrationrisk, which means it could face problems if depositors withdraw significantamount of funds.
Downward pressure on the rating may stem from a weakening ofsupport from the government, but Fitch believes such a scenario is unlikely inthe near to medium term.
Fitch could upgrade the rating if the bank's importance tothe local economy increases, such that the regional and central government havegreater propensity to provide extraordinary financial support to the bank.Fitch could also upgrade the rating if the bank's standalone profile improves,among other things.