Capital Intelligence (CI), the international credit rating agency, Monday, announced that it has affirmed ratings of Amen Bank, based in Tunis, Tunisia. Amen’s long- and short-term Foreign Currency Ratings were maintained at ‘BB-‘and ‘B’ respectively. The Financial Strength Rating was affirmed at ‘BB-‘, all ratings are maintained on a negative outlook however, due to the still significant challenges in t he operating environment and, particularly in respect of the Financial Strength Rating, to possible further deterioration in asset quality. The Support Rating is affirmed at ‘4’, reflecting a moderate level of support.
Amen Bank has a solid franchise in the Tunisian banking sector, with a prominent market share in both deposits and loans. The main challenge for the Bank over some years has been to improve its loan asset quality, an issue most Tunisian banks have based. There has been some improvement in Amen’ loan asset quality through a reduction in the level of non-performing loans against total lending – albeit aided by the growth in gross loans – and an increase in the provisioning coverage. However, following the downturn in the economy in H1 2011, the challenge will be to maintain the current level of asset quality.
The bank’s profitability improved in 2012 through both higher net and non-interest income and a continued low cost base. A steady performance was maintained in the first half of 20110. Capital is adequate but the gap between free capital and NPLs remain fairly high. Liquidity is however tight, as there is a high proportion of loans relative to total assets and to customer deposits. The bank needs either to raise deposits or tap wholesale markets and/or restrict loan growth going forward.
As is the case for all banks in Tunisia, the Amen Bank has been impacted by the revolution which occurred in January 2011. The economy has been hit hard, with both corporate and retail sectors impacted. Amen Bank’s non-performing loans rose in H1 2011 due to the downturn but at a moderate pace. Going forward, classified loans could rise further.
Amen Bank was founded in 1971 at Crédit Foncier et Commercial de Tunisia. Almost all (99.76%) of its ownership is held by private Tunisian interests. Its principal shareholder is the reputable (although there is no published information in regard to its financial position) Ben Yedder family, whose ownership of the Bank through several vehicles constitutes a controlling interest. They have held their stake for many years. At end 2010by total assets Amen was Tunisia’s fifth largest bank; it operates a 123-branch network with staff of around 980.