Press Release IDX-PEFINDO Prime Bank

Encouraging Product Diversification and Transaction in the Capital Market, PEFINDO and Indonesia Stock Exchange Launch
the IDX-PEFINDO PRIME BANK Index

PT Pemeringkat Efek Indonesia (PEFINDO), in synergy with PT Bursa Efek Indonesia (BEI) or Indonesia Stock Exchange (IDX), launched a new index called "IDX-PEFINDO Prime Bank" (Code: PRIMBANK10). PEFINDO President Director, Irmawati Amran said that IDX-PEFINDO Prime Bank was developed with the support of synergy and credibility between PEFINDO and IDX. "IDX-PEFINDO Prime Bank offers a choice of shares with a measurable rating from PEFINDO and is a market driver in the banking sector," explained Irmawati. Irmawati added that the launch of IDX-PEFINDO Prime Bank is expected to become a reference and main choice for investing in the stock market with special exposure to the banking sector. Currently, IDX-PEFINDO Prime Bank is the only banking index that accommodates PEFINDO ratings as a basis for constituent selection.

IDX-PEFINDO Prime Bank constituents were selected using credible criteria. As a universe, the index uses companies in the banking sector that issue shares (go public) and are rated by PEFINDO, either those that issue debt securities or simply rating companies. These banks are then screened using the following criteria:

1. Rating Factor. The bank has an Investment Grade rating from PEFINDO (idAAA to idBBB-). Higher ratings have a higher chance of being selected. PEFINDO Rating Indicators reflect these banks' fundamental business and financial performance.
2. Total Assets Factor. Banks with higher total assets are more likely to be selected as constituents. More considerable total assets indicate a larger business size and a better capacity to compete and generate profits.
3. Liquidity Factor. Banks with higher liquidity have a higher chance of being selected. IDX-PEFINDO Prime Bank uses comprehensive criteria to measure liquidity, combining:
   1. Number of days actively traded in IDX,
   2. Daily average trading volume in IDX,
   3. Daily average trading value in IDX,
   4. Daily average trading frequency in IDX, and
   5. Free float.
4. Market Capitalization Factor. Banks with greater total market capitalization are more likely to be selected as constituents. A more considerable market capitalization value indicates that the stock was selected as a market mover for the banking sector index.
5. Valuation Factor. IDX-PEFINDO Prime Bank uses price-to-earnings (P/E) and price-to-book (P/B) ratios to evaluate selected shares. This valuation factors P/E and P/B to determine which stocks are undervalued or overvalued relative to other stocks in the same sector.
6. Legal Factor. We use information related to unusual market activity & suspensions in the last 1 year as a basis for evaluation. IDX-PEFINDO Prime Bank prioritizes selecting shares that are traded regularly, fairly, and efficiently and, therefore, does not have records of both types of information.

Based on the factors above, we then selected the 10 best banks. How reliable are the criteria, and what are the selected constituents like? Let's dissect and see the results.

For July-December 2023, we selected the 10 best banks based on the criteria previously explained. They have strong ratings where 9 banks have an idAAA rating, and 1 bank has an idAA rating. In terms of business size and competitive capacity, these 10 banks control total assets of up to IDR7.8 quadrillion, or when compared with total banking assets as of June 2023 (IDR11.05 quadrillion), they contribute 70.58% of the market share.

Then, in the stock market, they also become market movers, reflected in their share of total capitalization in the financial sector. The 10 constituents selected for the IDX-PEFINDO Prime Bank index have a market capitalization of IDR2.85 quadrillion. This capitalization is equivalent to 82.20% of the total market capitalization of the financial sector. Or, if compared with the JCI market capitalization, it is equal to 27.63%.

The IDX-PEFINDO Prime Bank Index uses January 3, 2017, as the base date. The following table presents the return rate of IDX-PEFINDO Prime Bank compared to peers.

The return rate between IDX-PEFINDO Prime Bank vs. peers

"With this launch, we hope that the IDX-PEFINDO Prime Bank Index will become the main reference and choice for investing in the stock market with special exposure to the banking sector. For us, this launch will also expand the rating information that we provide to support a stronger and more reliable Indonesian capital market," said Irmawati. The launch of the IDX-PEFINDO Prime Bank index complements the rating-based index previously launched by PEFINDO, namely the PEFINDO i-Grade Index, which has provided a return of 7.90% year to date (YTD) or the highest among the indexes recorded in BEI.

This is for the public to know.

For Further Information:

PT Pemeringkat Efek Indonesia (PEFINDO)

Marketing and Business Development Division

Phone: +62 812-3456-5101

Email: marketing@pefindo.co.id