S&P changes outlook on three Indonesian banks to negative

S&P said it revised the outlook for three Indonesian banks to negative from stable citing the challenges of dealing with the coronavirus and its effect on asset quality.

“We have revised the economic risk trend for the banking system to negative from stable. Other banking industry scores are not affected,” the agency said in a press release.

S&P revised the outlook on PT Bank Mandiri (Persero) (Mandiri), PT Bank Rakyat Indonesia (Persero) Tbk. and PT Bank Negara Indonesia (Persero) Tbk. to negative from stable.

“In our view, the economic risk for Indonesian banks is rising due to the Covid-19 pandemic, which has affected tourism, transport, trade, manufacturing, and investment in the country. The pandemic is also hurting private consumption, which accounts for almost 60% of Indonesia’s GDP, given the social distancing measures imposed to contain the outbreak,” said S&P in a press release.

S&P affirmed the banks’ ratings citing the banks’ sizeable capital buffers.

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