Capital Intelligence (CI), the international credit rating agency Tuesday announced that it has maintained the Foreign Currency ratings of Tunisia’s Attijari Bank AB) at ‘B’ Long-term and ‘B’ Short-term. The Financial Strength rating is also affirmed at ‘B.’
The Outlook for both the Foreign Currency and Financial Strength ratings is ‘Stable’, reflecting the Bank’s strengthened financial profile, despite the uncertain political situation and operating environment and the attendant risks to financial performance.
Attijari Bank’s Support rating was raised to ‘3’ from ‘4’ based on the demonstrated support of its Moroccan parent, Attijariwafa Bank, and the opinion that further support, if needed in the future, would be forthcoming. AB’s financial profile has strengthened significantly over the last few years as the Bank has made notable inroads into addressing its large loan asset quality problems and very weak capital position.
Profitability has remained at a very good level since 2008, when the Bank first returned to profit following some years of losses.
Attijari Bank’s returns are now amongst the highest in the market, supported by a healthier and growing loan book, good margins and expanding non-interest income. Loan asset quality has improved through a decline in non-performing loans, and particularly through increasing provisioning coverage.
The Bank’s capital adequacy has strengthened considerably as reserves have turned positive, aided by higher levels of retained earnings; Attijari Bank met the 8% minimum regulatory ratio at end 2009 for the first time in some years and the ratio increased further at end-June 2010.
Nonetheless, capital adequacy needs to be enhanced further as the ratio of unprovided loans to free capital remained high at end-June 2010, despite having fallen sharply. Liquidity is comfortable, with key ratios at sound levels and funding supported by a good customer deposit base.
The recent political turmoil in Tunisia will have negative implications for the economy, at least over the next twelve months. Economic growth will be lower than previously forecast and there remains more risk to the downside.
Key economic sectors will be hit and will likely be a source of new non-performing loans going forward. Attijari Bank’s profitability, as is the case with the Tunisian banking sector, could come under pressure in 2011 on the back of possible asset quality deterioration and limited asset expansion.
Attijari Bank (previously known as Banque du Sud – BDS) was established in 1968. In 1971, Italy’s Monte Dei Paschi Di Siena (MDPS) acquired a stake in its capital. The Bank was partially privatised in 1997 and ownership up to November 2005 was MDPS 15.45%; several state companies/agencies 33.54% (combined total); several private groups 32% (combined total); publicly held 19%.
In November 2005, the government and MDPS sold their stakes to Morocco’s Attijariwafa Bank (AWB), which now owns 55% of Attijari Bank. AB is Tunisia’s fifth largest bank by total assets and operates a system of 169 branches nationwide.