(The following statement was released by the rating agency)
Nov 02 - Fitch Ratings has assigned a rating of National Long-term 'AA (idn)' with a Stable Outlook to the financing company PT Mandiri Tunas Finance (MTF), which is domiciled in Indonesia.
The ratings reflect the strong relationships and continuing support from the majority shareholder, PT Bank Mandiri (Persero) Tbk (Self; 'BBB-' / Stable), which owns 51% of MTF. It is based on a strategic importance for the Independent MTF in developing consumer financing in the country. Mandiri will continue to provide financial support to the MTF with joint financing scheme where Mandiri will bear most of the credit risk.
Developments leading to the weakening of support from the parent company, such as a significant change of ownership or weakening of the financial holding company, may cause some notch downgrade MTF. This is because credit profile MTF itself is not strong enough to support the current ratings.
Receivable financing companies increased rapidly to 9.9 trillion rupiah at the end of June 2012 from 08.04 trillion rupiah at the end of December 2011 and 2.4 trillion rupiah at the end of December 2009. Most of the growth was financed by joint financing with Mandiri. MTF target 85% of the total portfolio of the scheme will be funded by joint financing with Mandiri, up from around 79% today.
Despite the rapidly increasing financing, asset quality is maintained by MTF NPL ratio (overdue more than 90 days) is about 1% of total loans at the end of June 2012 and December 2011. Fitch hopes MTF asset quality will improve in the near and medium term due to tighter regulations on advance financing of cars and motorcycles.
Debt to equity ratio declined to 5.9x at end-June 2012 (end-2011: 7x) along with debt payments in 2012. Fitch believes MTF will maintain a debt to equity under the terms of which have been set at 10x.
MTF is a non-captive finance company that provides financing for cars and motorcycles and retail customers leasing. The company is owned by Bank Mandiri (Self, 51%) and PT Tunas Tbk (Tunas, 49%).