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Tunisia: Capital Intelligence upgrades ratings of Attijari Bank

Capital Intelligence (CI), the international credit rating agency, Tuesday, announced that it has upgraded the ratings of Attijari Bank (AB), based in Tunis, Tunisia.

AB’s Long-Term Foreign Currency (FC) Rating was upgraded to ‘BB-‘ from ‘B’ previously. The Short-Term FC Rating was maintained at ‘B’. In addition, the Financial Strength Rating was lifted to ‘BB-‘ from ‘B’.

Both upgrades reflect the improvement in AB’s overall financial profile- specifically capital adequacy and loan-asset quality, in combination with slightly better than average liquidity. The Outlook for both the FC and Financial Strength Ratings reverts to ‘Stable’ from ‘Positive’.

The Support Rating is maintained at ‘3’, based on the demonstrated support of the Moroccan parent, and the opinion that further support, if needed in the future, would be forthcoming.

AB’s financial profile is reasonable in the context of the Tunisian banking sector. Although bottom line profitability weakened in 2011, this was due to much larger loan provisioning charges, as well as a much higher tax charge. At the operating profit level, the performance improved slightly. Returns to end-June 2012 were stronger, with both net interest and non-interest income performing well.

The Bank’s loan-asset quality improved in 2011, after writing-off bad loans. Despite being high, AB has one of the lowest non-performing loans (NPL) ratios in the sector.

Provisioning coverage also improved in 2011. However, NPLs rose very briskly in H1 2012, while the impact of the events in 2011 and of the weak economy has flowed through to the Bank’s portfolio.

AB’s capital adequacy has strengthened considerably over the past few years, and rose further, albeit slightly, in both 2011 and H1 2012. The ratio of unprovided loans to free capital, although still on the high side, has fallen since the high levels seen in previous years. Liquidity is just about adequate, with some key ratios deteriorating over the past two years as loan growth was maintained, while customer deposit growth remained weak. Nonetheless, AB’s position is reasonable, compared to the peer group.

Attijari Bank (previously known as Banque du Sud) was established in 1968. In 1971 Italy’s Monte Dei Paschi Di Siena (MDPS) acquired a stake in its capital.

The Bank was partially privatized in 1997. In November 2005, the government and MDPS sold their stakes to Morocco’s Attijariwafa Bank (AWB), which now owns 55% of AB.

At end-June 2012, AB’s total assets stood at TND4.5 billion (USD3.2 billion). It operates 181 branches nationwide, the largest network in the country.

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