Tuesday 05, December 2017 by Matthew Amlôt

CI: Attijari Bank’s ratings affirmed with a ‘stable’ outlook

Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, today announced it has affirmed the ratings of Attijari Bank (AB), based in Tunis, Tunisia.

AB’s Financial Strength Rating (FSR) is affirmed at ‘BB’, supported by its solid liquidity (particularly in the context of the Tunisian banking sector), sound profitability, and good loan asset quality compared to that of the sector. The rating is constrained by the Bank’s modest level of risk-weighted capital and the very challenging operating environment. Many of AB’s metrics might be seen as warranting a higher FSR but the current challenging operating environment prevents upward pressure at this time. AB’s Long-Term Foreign Currency Rating (FCR) is maintained at ‘BB’ and the Short-Term FCR at ‘B’. The Outlook for all the ratings is ‘Stable’. The Support Rating is maintained at ‘3’, based on the support of the Moroccan parent (Attijariwafa Bank, AWB) and the opinion that further support, if needed in the future, would be forthcoming.

AB, Tunisia’s sixth largest bank by assets, holds a sound financial profile relative to the peer group due to better loan asset quality, a relatively good level of liquid assets, and solid profitability. Operating profit was higher in 2016 and returns at this line are good. Improved gross income in 2016 was aided by non-interest income in particular. AB’s bottom line return was supported by a small provision writeback in 2016. The Bank’s returns remained sound and at the higher end of the Tunisian peer group. Net and operating profit to end-June 2017 also advanced, mainly due to net interest income.

Loan asset quality is good compared to that of peer banks and its asset quality has improved over the past few years. Non-performing loans declined in 2016 but recorded a small increase (two per cent) in the six months to June 2017. Provisioning coverage has improved and is at a sound level, although the effective coverage ratio is low. Pressure remains on loan asset quality throughout the sector, however, due to the weak economy, but AB has good credit management in place.

AB’s capital adequacy is very modest by international standards, although the capital adequacy ratio is above local regulatory requirements. It was supported in both 2015 and 2016 through the issue of subordinated bonds, which qualify as tier two capital, as well as retained earnings, although the payout ratio is high. The Bank’s liquidity is sound and its position is better than most peer banks through a greater amount of liquid assets and a higher proportion of customer deposit funding.

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 privatised in 1997. In November 2005, the government and MDPS sold their stakes to Morocco’s AWB, which now owns 59% of AB. AWB’s stake is held through a holding company called Andalou Carthage. AWB manages the Bank and there a number of seconded executives. AWB was established in 1911 as Banque Commerciale du Maroc and is Morocco’s oldest and largest bank. At end June 2017, AB’s total assets stood at TND7,333 billion ($3.0 billion).

  

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