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View all search resultsMoody’s downgrades BTN’s baseline credit assessment over solvency risks
The global rating agency downgraded the state-owned lender’s inherent creditworthiness to Ba2 citing real risks in its outstanding loans and accrued interest receivables, though it maintained BTN’s overall credit rating at Baa2 with a stable outlook.
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A customer conducts a transaction at a BTN Syariah branch in an undated photo. (BTN Syariah/-)
M
oody's Ratings has downgraded the baseline credit assessment (BCA) of state-owned mortgage lender Bank Tabungan Negara (BTN), citing apparent solvency risks not reflected in the bank's reported financial ratios.
The credit rating agency said BTN had a relatively low level of provisioning considering the risks in its assets, such as a high level of restructured loans and accrued interest receivables.
“This could result in its reported earnings and capital not fully capturing the underlying stresses on its financial profile,” Moody’s analyst Clarabelle Tan and associate managing director Patrick Winsbury wrote in their analysis on Wednesday.
That prompted the rating agency to slash the state-owned lender’s BCA, which focuses on a financial institution's inherent or stand-alone creditworthiness, from Ba1 to Ba2.
This differs from BTN’s overall credit rating, which takes into account the likely availability of government support when needed. Moody’s affirmed this rating as Baa2 with a stable outlook, citing the lender’s systemic importance as one of Indonesia’s largest banks by assets, the government's majority ownership and the bank's policy role in driving the government's housing initiatives.
“The affirmation of BTN's Baa2 deposit rating incorporates our assessment of a very high probability of support from the government of Indonesia (Baa2 stable) in times of need,” the analysts wrote.
As the country’s largest issuer of subsidized mortgages, BTN holds an 85 percent share of the country’s affordable housing mortgage market, according to a 2022 analysis from Jakarta-based financial services firm Ciptadana.
