Fitch Ratings - Jakarta - 13 Aug 2020: Fitch Ratings Indonesia has revised the Outlook on the National Long-Term Rating of PT JACCS Mitra Pinasthika Mustika Finance Indonesia to Negative from Stable. The National Long-Term Rating was affirmed at 'AA(idn)'. A full list of ratings is below.

The action mirrors the Outlook revision on the Long-Term Issuer Default Ratings of JACCS MPMF's ultimate parent, Mitsubishi UFJ Financial Group, Inc. (MUFG, A-/Negative/a-), to Negative from Stable. This indicated downward pressure on MUFG's ability to provide support to the Company's parent, JACCS Co. Ltd. (JACCS), and to the Company (see "Fitch Revises Outlook on MUFG Group and Affiliates to Negative; Affirms Ratings", published on 4 August 2020, at www.fitchratings.com/site/pr/10131407).

KEY RATING DRIVERS

JACCS MPM Finance Indonesia's ratings are driven by Fitch's expectation of extraordinary institutional support from majority shareholder JACCS and ultimate parent MUFG if needed. JACCS holds 60% of the Company and is 21.9%-owned by MUFG. Fitch believes JACCS will be motivated to support its subsidiary in times of need due to long-term plans to expand in the ASEAN region, with Indonesia being the largest overseas investment to date. The name-sharing of JACCS with its subsidiary provides an additional incentive for the parent to support JACCS MPMF if required.

Nonetheless, Fitch sees JACCS MPM Finance Indonesia as a subsidiary of limited importance to JACCS at present, due to the limited synergies between the two, the subsidiary's limited contribution to its parent, and the significant influence of minority shareholders PT Mitra Pinasthika Mustika Tbk. JACCS operates mainly in the credit card and credit guarantee business in Japan, whereas the Company engages in car and motorcycle financing in Indonesia.

Fitch views JACCS MPM Finance Indonesia's standalone credit profile as weaker than that based on parental support, due to the small franchise and lower-than-peer profitability. This is balanced against its acceptable asset quality, and a capitalization and funding profile that benefits from support from JACCS - although the company's operating performance is likely to come under further pressure due to the economic challenges arising from the coronavirus pandemic.