August 6, 2014 / 7:12 PM / 3 years ago

Fitch Affirms Attijariwafa Bank at 'BB+'; Outlook Stable

(The following statement was released by the rating agency) PARIS/LONDON, August 06 (Fitch) Fitch Ratings has affirmed Morocco-based Attijariwafa Bank's (AWB) Long-term foreign currency Issuer Default Rating (IDR) at 'BB+', Viability Rating (VR) at 'bb-' and Support Rating (SR) at '3'. The Outlook on the Long-term ratings is Stable. A full list of rating actions is available at the end of this commentary. KEY RATING DRIVERS: IDRs, NATIONAL RATINGS, SUPPORT RATING AND SUPPORT RATING FLOOR AWB's IDRs, National Ratings, SR and Support Rating Floor (SRF) reflect a moderate probability of support from the Moroccan authorities. AWB is one of the Moroccan leading corporate and retail banks with a 26% market share in both deposits and lending. It is domestically-owned and operates internationally with subsidiaries in Tunisia and in sub-Saharan African countries. The Stable Outlook on the bank reflects the Moroccan sovereign's Outlook. Fitch considers that the Moroccan authorities would have a high propensity to support AWB if needed, given the bank's strong franchise in the country. However, Fitch views the probability of support as only moderate given Morocco's financial strength (BBB-/Stable). RATING SENSITIVITIES: IDRs, NATIONAL RATINGS, SUPPORT RATING AND SUPPORT RATING FLOOR The IDRs, SRF and SR would be sensitive to any change in Fitch's view of the Moroccan state's willingness or ability to support the bank. AWB's National Ratings would be downgraded if the sovereign is downgraded by multiple notches. KEY RATING DRIVERS: VIABILITY RATING AWB's VR reflects its modest capital ratios and moderate asset quality given its high loan book concentration, significant international exposures towards weak economies and high related-party lending. It also factors in AWB's leading domestic franchise, its capacity to generate sustained profitability and its overall acceptable funding and liquidity profile. Fitch views AWB's modest capital ratios as having a higher influence on its VR than other attributes. Compared with peers, AWB's capitalisation is modest given its high loan book concentration and exposure to volatile markets such as sub-Saharan African countries and Tunisia (together 21% of total assets at end-2013). The Fitch core capital (FCC) ratio was only 8.8% at end-2013, although it has been increasing since 2011 (8.2% at end-2012 and 6.5% at end-2011). Fitch views AWB's asset quality as moderate. AWB's impaired loans ratio was 6.3% in 2013, reflecting economic pressures encountered by Moroccan corporates and SMEs (66% of loan portfolio at end-2013), a still challenging operating environment in Tunisia (6.5% of AWB's loans portfolio) and weak economies in sub-Saharan African countries (13%). Fitch expects impaired loans to keep rising in 2014, albeit only moderately, due to persistent economic uncertainties in those countries. High obligor concentration in AWB's loan book still represents a material credit risk. At end-2013, six credit exposures represented more than 10% of FCC, with the top 20 obligors representing a significant 2.1x FCC. This concentration reflects, to some extent, the concentration of the Moroccan economy in certain sectors and AWB's high domestic market shares. Those large exposures included related-party lending (which accounted for 27% of AWB's FCC at end-2013), which Fitch considers a rating weakness. AWB's profitability remained strong in 2013 despite slowing growth in domestic loan activity and higher loan impairment charges. Operating profitability was supported by international loan activity and a controlled cost-to-income ratio (44.5% in 2013). Fitch considers AWB's funding and liquidity profile as acceptable. Retail deposits form the bulk of funding (75% of total funding - excluding equity - at end-2013) and liquidity is improving as a result of slowing demand for credits and continuously growing client deposits. Fitch considers that AWB's buffer of available liquid assets is acceptable. It only covers six months of short-term market funding, but one year-and-half of short-term market funding when excluding repo with the Moroccan Central Bank. RATING SENSITIVITIES - VR The VR would benefit from an improvement of AWB's capitalisation. Conversely, higher credit risk or a significant deterioration of asset quality could put pressure on AWB's VR. 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)' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB+' Viability Rating: affirmed at 'bb-' Contact: Primary Analyst Sonia Trabelsi Director +33 144 2991 42 Fitch France S.A.S 60 rue de Monceau 75008 Paris Secondary Analyst Solena Gloaguen Director +44 20 3530 1126 Committee Chairperson Eric Dupont Senior Director +33 1 44 29 91 31 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, Global Financial Institutions Rating Criteria, dated 31 January 2014 and 'National Scale Ratings Criteria', dated 30 October 2013 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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