Indonesian banks insulated from direct subprime woes, outlook stable - Moody`s

Mumbai (Antara News) - Moody's Investors Service said it sees the financial fundamentals of Indonesian banks remaining steady and has a stable outlook on them as they have escaped direct effects of global credit turmoil due to absence of exposures to structured debt products.

The bank managements in Indonesia are more concerned about the indirect impact of the subprime issue on global macro-economics as the country's regulators do not permit investments in products like collateralized debt obligations or structured investment vehicles, the ratings agency was quoted by Thomson Financial as saying.

Moody's sees Indonesian banks broadly sustaining their creditworthiness, which implies manageable asset quality, modest economic capital solvency, improved profitability and reform.

The ratings agency said it sees the divergence between the performances of state-owned banks and rated private-owned banks continuing in the near term.

It added that the excess capacity still remains despite the number of players cut by a third due to consolidation and divestment in the industry. (*)
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