News and Highlights
News and Highlights
Jakarta, 4 August 2022
Financial Performance Continues to Improve, PPA Gains Recognition from Two International Rating Agencies
Jakarta, 4 August 2022 – The financial performance of PT Perusahaan Pengelola Aset (PPA/Company) which continues to improve throughout 2022 has received affirmations from two international rating agencies, namely S&P Global Ratings and Fitch Ratings.
S&P Global Ratings in a research report released last July upgraded the PPA’s long-term outlook rating to ‘stable’. At the same time, S&P Global Ratings also increased the stand-alone credit profile (SACP) of PPA and affirmed the issuer credit ratings of PPA with the predicate of ‘BB/B’.
The strengthening of the PPA rating reflects the improvement of the PPA’s capital structure which has the full support of the Government. S&P Global Ratings assesses that PPAs have a strong capital base with a more cautious approach to asset growth despite economic challenges from external factors. PPA management is also considered capable of controlling the volatility that occurs, even being able to initiate an expansion phase that is in line with the Company’s transformation plan.
In a separate report, Fitch Ratings also gave a stable outlook and raised the SACP PPA due to an improvement in the Company’s financial profile. Fitch Ratings also provides an ‘AA(idn)’ rating on PPA-issued national bonds. The ‘AA’ rating indicates a very low level of default risk compared to other issuers or bonds.
Fitch Ratings considers the Government’s very strong status, ownership and control to be the deciding factors that show full support for the PPA. In addition, the PPA is rated to be in a stable operating environment without significant market competition.
President Director of PPA Yadi Jaya Ruchandi said, “PPA has taken a number of strategic steps to produce sustainable growth, ranging from organizational transformation, strengthening capital and liquidity structures, improving business processes, strengthening risk management, to improving the quality of asset portfolios. The affirmations from S&P Global Ratings and Fitch Ratings motivate us to continuously improve the Company’s performance to provide significant value and impact to the country.”
In its report, S&P Global Ratings also highlighted the risks faced by the banking sector remained high after the pandemic, especially after the extension of the relaxation period for bank loan restructuring ended on March 31, 2023. Non-performing loans (NPLs) are expected to remain stable in 2022, but there are loans at risk (LAR) that have the potential to become NPLs in the range of 1:10 to 1:8. In 2023, S&P projects an increase in the NPL ratio to 5% after the end of the relaxation policy.
“PPA has experience and track record in managing banking NPLs in Indonesia. The inventive solution with the off-balance sheet scheme that we have successfully implemented in the settlement of low-quality assets of PT Bank Muamalat Indonesia Tbk is expected to facilitate the completion of NPLs for the financial industry at large,” said Yadi.
Based on the mandate given by the Government, PPA has a role as a strategic instrument in optimizing the value of SOE assets and the SOE ecosystem through three main business pillars, namely Restructuring &revitalizing SOEs, Managing NPL, and Special Situations Fund (SSF) investment solutions.
PPA is intensively implementing a turnaround strategy for several SOEs through restructuring and refocusing on core businesses to drive sustainable growth. The PPA is also exploring cooperation in the management of NPLs with a number of banks. From the SSF business pillar, PPA has taken a number of strategic steps to optimize the value of the SOE ecosystem through advisory and investment solutions.
As of semester 1 of 2022, PPA recorded a significant consolidated operating profit growth of up to 187% compared to the operating profit of the same period the previous year (year on year /yoy) and an increase in net profit of 58% yoy.