'AA' National Long-Term Ratings denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest-rated issuers or obligations.

'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

JACCS MPM Finance Indonesia's ratings are support-driven, reflecting Fitch's expectation of extraordinary support from majority shareholder JACCS, if required. JACCS holds 60% of the Indonesian finance company and is 21.9%-owned by MUFG. Fitch believes JACCS will have some incentive to support the subsidiary in times of need due to the parent's long-term plans to expand its business in the ASEAN region, with Indonesia being its largest overseas investment to date.

In our view, the parent's propensity to provide support is somewhat limited as we see JACCS MPM Finance Indonesia as a subsidiary of lower importance to JACCS. This primarily stems from the limited synergies between the two, the subsidiary's modest contribution to its parent, and the significant influence of minority shareholder PT Mitra Pinasthika Mustika Tbk in strategy and operations. JACCS engages mainly in the credit card and credit guarantee business in Japan, whereas the subsidiary focuses on financing for car and motorcycle purchases in Indonesia. The Company's total assets accounted for a modest 2% of JACCS's total consolidated assets in 1Q20.

Fitch expects the performance of Indonesian finance companies, including JACCS MPM Finance Indonesia, to deteriorate in the short term due to the challenging operating environment and large-scale economic disruption caused by the pandemic. This will put pressure on companies' asset quality, profitability, and credit growth, while funding access may become more difficult, particularly for independent companies. Fitch has revised the outlook on our assessment of the operating environment for Indonesia's finance companies to negative from stable to reflect these risks. For details, see our commentary "Coronavirus to Challenge Indonesian NBFIs on Multiple Fronts" at www.fitchratings.com/site/pr/10115616, published 30 March 2020.

Additional information can be found at www.fitchratings.com