TEXT-Fitch affirms Attijartiwafa Bank ratings

(The following statement was released by the rating agency)
Feb 8 - Fitch Ratings has affirmed Attijariwafa Bank's (AWB)
Long-term foreign currency Issuer Default Rating (IDR) at 'BB+', Short-term
foreign currency IDR at 'B', Viability Rating (VR) at 'bb-' and Support Rating
at '3'. The Outlook on the bank's Long-term IDR is Stable.
A full list of rating actions is at the end of this comment. AWB's IDRs are
based on the potential support expected from the Moroccan authorities if needed,
given the bank's strong franchise in the country. AWB is Morocco's largest bank
by total assets (which accounted for around 41% of Morocco's GDP at end-H111).
Nevertheless, Fitch views the probability of support as moderate considering
Morocco's ('BBB-'/Stable) financial strength.
AWB's VR reflects the bank's high obligor concentrations (the bank's 20
largest obligors on- and off- balance sheet amounted to 2.3x AWB's Fitch core
capital at end-H111), potential corporate governance issues arising from related
party lending, decreasing liquidity and fairly weak capitalisation. The rating
also considers the bank's satisfactory profitability and revenue generation
supported by its diversified business mix and strong market presence. AWB's
asset quality indicators remain in line with local peers and net impaired loans
were moderate at 11.37% of equity at end-H111. Nevertheless, high obligor
concentration in the loan portfolio exposes the bank to rapid asset quality
deterioration in case of an economic downturn.
In addition, the largest 20 obligors included two related parties with
exposures of above 10% each. AWB's liquidity indicators have been decreasing
since 2007, driven by the stronger loan growth compared to customer deposits
which are traditionally the bank's main funding source (71% of non-equity
funding at end-H111). AWB's loan to deposits ratio was 108.6% (103.3% at
end-H111 if certificate of deposits placed with clients are included). Use of
market funding is increasing. Pressure on AWB's funding and liquidity, similarly
to the overall banking sector, since end-2010 have been eased by the support
from the Moroccan central bank which provides refinancing facilities backed by
eligible Moroccan securities. Fitch views AWB's capitalisation, with a Fitch
core capital at 7.46% at end-H111, as fairly weak given the bank's risk profile
and growth strategy. Nonetheless AWB does not exclude a capital increase in
2012.
The rating actions are as follows:
Long-term foreign currency IDR: affirmed at 'BB+'; Outlook Stable
Short-term foreign currency IDR: affirmed at 'B'
Long-term local currency IDR: affirmed at 'BBB-'; Outlook Stable
Short-term local currency IDR: affirmed at 'F3'
National Long-term Rating: affirmed at 'AA-(mar)'; Outlook Stable
National Short-term Rating: affirmed at 'F1+(mar)'
Viability Rating: affirmed at 'bb-'
Support Rating: affirmed at '3'
Support Rating Floor: affirmed at 'BB+'

(Caryn Trokie, New York Ratings Unit)