Fitch: Indonesia banks steady

Fitch Ratings said in a new report that the global economic downturn in 2009 has little impact on most Indonesian banks.

Fitch said the banks put in a steady performance in 2008 and 2009 as above-average core profitability helped offset the impact of higher provision charges of about 3% in 2009. Above-average profitability also reflected superior net interest margins aided by deposit rates declining faster than lending rates in 2009, the agency said.

With stronger economic growth predicted for 2010, the operating conditions for Indonesia's banks should be supportive of credit quality and earnings growth in the year ahead, Fitch said.

The agency said it expects the financial performance of Indonesian banks to improve further in 2010, given the more favorable global macroeconomic outlook, although increased competition for market share may dampen net interest margins.

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