ATB certainly has a deficit. But it’s certainly not a disaster. And there is even an explanation. An explanation that is not always obvious, but which sheds a different light on the performance of this bank. The latter has changed its Chairman of the Board of Directors in the person of Naïm Alhusseini, but not yet its CEO, Riadh Hajjaj, who still enjoys the confidence of the Jordanian Arab Bank Group.
A bank unlike any other
This result can largely be explained by the continuity of the restructuring process launched in 2019 to clean up the balance sheet and restructure and reorganize the bank. This has been a long but necessary process, which has mobilized a total of €625 million in provisions and reserved agios over six years.
We were faced with 3 major areas of reform. First, we had to clean up. Secondly, operational efficiency, and finally the financial cost to the bank of amending certain regulatory texts in preparation for the entry into force of IFRS standards. This process consumes between 35 and TND 40 million in provisions each year, in addition to provisions for the portfolio,’ explains ATB’s current CEO.
For 2023, the bank had set aside €124 million in provisions, and the result would have been different had it not been for this prudential decision to strengthen equity rather than pay dividends.
According to ATB’s management, the bank, which has a corporate portfolio and less than 24% retail, would not have expected to end the year with a deficit had it not been for the difficult economic situation, characterised by a slowdown in growth.
In this respect, he points to the difficulties of recovery, despite the TND 15 million achieved, due to the impact of this economic situation on many of his clients.
And we are quoted figures from the BCT’s Bulletin of Financial Statistics, according to which problem loans, unpaid, classified, consolidated or rescheduled, had increased by 24% in the 11 months to 2023, compared with 4% in 2022.
In order to explain this loss in the face of increasing profits, the Bank also states that its BTA portfolio of TND 600 million dinars represented only 7.8% of its assets in 2023, but that, although this portfolio has decreased in volume in recent years, this has not distracted it from its duty to finance the State’s imports, according to a schedule and quota per bank negotiated and agreed within the CBF and with the ministries concerned.
Performance despite crisis and deficit
Riadh Hajjej, who is confident of the bank’s solidity, describes the performance achieved by ATB despite a deficit of TND 9,406 million at the end of 2023.
Customer deposits stood at TND 6,349 million at 31 December 2023, compared with TND 6,213 million at the end of December 2022, an increase of TND 136 million.
Confirmation of the strategy of attracting the cheapest deposits, with savings deposits increasing by 9.2% and time deposits decreasing by 0.4% at the end of 2023. The level of gross loans to customers was maintained at the 2022 level, despite the difficult economic climate. Turnover increased by 14.9% to TND 763 million at the end of 2023, compared to TND 664 million a year earlier.
The net banking income at the end of 2023 was TND 357 million, compared to TND 320 million in the previous year, an increase of 11.8% compared to 2022. The structure of ATB’s NBI shows an increase in the interest margin, which rises from 41.7% in 2022 to 50.6% in 2023.
On the other hand, general expenses increase by 7% to TND 231 million, compared with TND 216 million at the end of December 2022. This increase is lower than the average monthly inflation rate of 9.2%.
Ratios showing excellent financial strength
There is also a solvency ratio of 10.94% compared with a regulatory minimum of 10% and a Tier 1 ratio of 7.36% compared with a regulatory minimum of 7%.
In our novice’s opinion, clients and partners have nothing to fear from the 2023 result, which could be just a bad step compared to the 2024 result that is already taking shape; in February last year, the liquidity ratio rose to 260%.
The bank’s CEO confirmed this, pointing out that “in February 2024, we had a liquidity surplus of TND 580 million, which until then had been placed in overnight deposits with other banks, giving us easy access to liquidity, the capacity to meet all our needs and a comfortable cushion with which to respond to customers’ credit requests”.
In addition, during the first quarter of the current financial year, the BOI grew by TND 12.5 million, NBI rose from TND 82.4 million to TND 90.658 million, an increase of almost 10%, and customer deposits stood at TND 6,199.4 million at December 31, 2024, compared to TND 5,854.2 million at the end of March 2023.
A parent bank that won’t let go of its protégé
ATB is also a subsidiary of a major Jordanian group, Arab Bank, whose rating is better than that of the Tunisian state and which is actively supported by its parent bank.
In practice, it is a bond issue granted to ATB in 2019, at MMR-1.5 of TND 75 million, of which TND 50 million is perpetual, redeemable at the exclusive request of ATB (while similar issues by banks in 2019 vary between MMR+2.75 and MMR+3.5, and similar recent issues since December 2022 vary between MMR+1. 8 and MMR+3). This is besides a capital increase through the reserved issue of 28 million investment certificates with a nominal value of TND 1 and an issue premium of TND 1.5, i.e. an injection of TND 70 million into the bank’s equity capital, without any increase in Arab Bank’s voting rights at ATB’s General Meetings. It will remain at 64.24%, i.e. the same level as before the capital increase through the issue of these certificates.
In ATB, we are fortunate to have a majority shareholder that still believes in the bank’s future and has always been firmly committed to the Tunisian economy,” says Riadh Hajjaj, adding that “the capital increase already decided for 2021 to reach a share capital of TND 200 to 220 million is still a strategic choice that the Board of Directors will implement in the future.
