... headwinds ¡ including a high-interest- rate environment, slowing economic growth and a commodity-sector downturn ¡ remain key challenges for the 10-largest Indonesian banks assessed by Fitch Ratings. But we expect their profitability and capitalisation profiles to provide satisfactory loss-absorption buffers. Largest Banks Staying Strong: We believe the top-three banks, namely Bank Mandiri, Bank Rakyat Indonesia and Bank Central Asia, will continue to deliver strong profitability for the rest of 2015 due to the low cost deposit (about 40% of system deposits as of end-5M15) and increases in credit costs (1H15: 16.6%; 2014: 16.5% over pre-provision operating profit (PPOP)) that we believe are manageable for these lenders. The performance of second-tier banks was undermined by higher credit cost due to their larger exposure to the commodity sector and greater pressure on their interest margin in the near to medium term. Their weaker performance...
