15:07 21Feb2005 RTRS-S&P REPORT: INDONESIAN BANK SECTOR RISK PROFILE HIGH
15:08 21Feb2005 RTRS-TEXT-S&P reports on Indonesian banking sector
(The following statement was released by the ratings agency)
LONDON, Feb 21 - The Indonesian banking system risk profile remains high by
international standards, despite progress in rebuilding its financial base,
said Standard & Poor's Ratings Services today.
According to a commentary titled "Bank Industry Risk Analysis: Indonesia"
published today, the industry faces risks such as the overhang of sizable,
although declining, nonperforming assets (NPAs), sluggish loan growth to the
real sector, regulatory forbearance and a degree of economic uncertainty caused
by terrorist bombings in 2003 and 2004.
"The Indonesian banking sector has slowly begun to rebuild its financial
base since the 1997 economic crisis, and progress in this has accelerated in
the past three years," said Standard & Poor's credit analyst Adrian Chee of the
Financial Services Ratings Group. "The level of capitalization in the overall
banking system has improved with the gradually rising investor confidence,
following several completed privatization programs, and partially improved
political stability," Mr. Chee added.
The key risks in the system include incomplete resumption of banks' former
role as financial intermediaries and a high reliance on interest income from
government securities. On the other hand, the positive factors include: (1) a
stabilizing operating environment, characterized by a relatively more stable
exchange rate and manageable inflation; (2) improved capitalization; and (3)
improving asset quality.
((London Capital Markets +44-20-7542-4688
fax +44-20-7542-5285, [EMAIL PROTECTED]
Reuters Instant Messaging [EMAIL PROTECTED]))
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Monday, 21 February 2005 15:07:16RTRS [nWLB0917] {EN}END
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