Fitch Ratings Indonesia has affirmed PT Bank Woori Saudara Indonesia 1906, Tbk's (BWS) National Long-Term Rating at 'AAA(idn)' with a Stable Outlook and National Short-Term Rating at 'F1+(idn)'.

'AAA(idn)' National Long-Term Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union.

'F1' National Short-Term Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country or monetary union. Where the liquidity profile is particularly strong, a '+' is added to the assigned rating.

Key Rating Drivers

Support-Driven Rating: The National Long-Term Rating reflects Fitch's expectation that BWS's South Korea-based parent, Woori Bank (A/Stable/a-), would provide extraordinary support to BWS in times of need. BWS is 84.2% owned by Woori.

Underpinned by Parent's Viability Rating: BWS's ratings are driven by Woori's Viability Rating, as we expect that any potential support is likely to come from Woori's internal resources.

Significant Ability to Support: We believe Woori has a strong ability to extend support to its Indonesian subsidiary. This is based on BWS's small size relative to its parent, with its assets constituting just 1.1% of Woori's consolidated assets at end-2023.

Strong Support Propensity: We believe that BWS is an important part of its parent's expansion in south-east Asia, particularly in the fast-expanding emerging market of Indonesia. We believe there would be high reputational risk for the parent should BWS default, based on common branding, high integration and BWS's established relationships with Korean companies in Indonesia.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade could result from a weakening of BWS's credit profile relative to entities in the Indonesian national rating universe. This could result from a two-notch downgrade in Woori's Viability Rating to 'bbb', although we believe this is unlikely in the near to medium term.

A weakening in the parent's propensity to provide support could also result in a downgrade. This could arise from major ownership changes or a weakening of BWS's role in the group, which could stem from a reassessment of Woori's business prospects in Indonesia or persistently weak performance at BWS. We believe neither are likely in the near- to medium-term considering the parent's commitment to inject capital into BWS via a rights issue in 1H24.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

There is no upside for the ratings, as they are already at the highest point on the scale.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

BWS's support-driven ratings are linked to Woori's Viability Rating, based on our expectation of extraordinary support.

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