BANK INTERNASIONAL INDONESIA RATED BB+/B BY S&P.

LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 10/21/97--Standard & Poor's today assigned its double-`B'-plus long-term and single-`B' short-term counterparty ratings to P.T. Bank Internasional Indonesia (BII). While the ratings reflect the bank's very sound domestic franchise, BII has a superior financial profile, which distinguishes the bank from its domestic peers. BII's asset quality, profitability, capitalisation, and provisioning compare most favourably with those of its domestic peers and are sound in an international context. Offsetting these positive features is the bank's strong rate of lending growth, which may lead to a deterioration in asset quality as the lending portfolio seasons. This has intensified as a rating concern because of the recent surge in Indonesian interest rates and the significant devaluation in the rupiah.

As the third-largest private commercial bank in Indonesia, BII had assets of Indonesian rupiah (Rp) 19.7 trillion, or US$8.1 billion, as of June 30, 1997, which is about 4.6% of Indonesian commercial banking assets. Standard & Poor's views BII's membership in principal shareholder the Sinar Mas group as a neutral rating factor. Sinar Mas, however, historically has been a supportive and stabilising influence for BII. BII has a very sound domestic banking franchise, with about 70% of its revenues derived from the domestic corporate sector. In addition to corporate lending, BII is one of the domestic market leaders in trade finance, U.S. dollar/rupiah swaps, and syndicated loans.

As indicated by its ratio of nonperforming assets to gross loans, of 1.47% as of June 30, 1997 and its return on assets of 2.15%, BII's asset quality and profitability compare most favourably with domestic peer average and are sound in an international context. Nonetheless, BII may have difficulty maintaining its sound asset quality and profitability. Strong asset growth in recent years may have obscured BII's true embedded asset- quality position. Standard & Poor's believes that BII's level of problem loans will increase over the short to medium term as a result of Indonesia's current high interest rate environment and currency devaluation. As of June 30, 1997, about 28% of BII's gross loans were in property and construction, with a total of 31% of gross loans in foreign currency. Indonesia's current economic environment is likely to affect these exposures the most. BII, however, has superior capitalisation and provisioning by domestic standards. Because of a substantial rights issue, BII's ratio of adjusted common equity to assets was a strong 12.29% as of June 30, 1997, which compared favourably with domestic peer averages. Provisioning also compares favourably with that of its peers, as illustrated by the ratio of provisions to gross loans, which equalled 2.43% as of June 30, 1997. BII's stronger capital and provisioning, relative peer averages, should provide BII with relatively greater flexibility to absorb an anticipated increase in problem loans.

OUTLOOK: Negative.

Standard & Poor's will be gauging the impact of the recent economic deterioration in Indonesia on BII's sound financial profile. Nonetheless, because of its superior financial profile, BII is expected to handle intensified economic and industry risks more satisfactorily than many of its domestic peers, Standard & Poor's said. -- CreditWire

CONTACT: Terry Chan, Melbourne (61) 3-9250 4532,

Roger Taillon, New York (1) 212-208-1570.

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