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Fitch Affirms Attijariwafa Bank; Outlook Stable
August 12, 2013 / 4:26 PM / 4 years ago

Fitch Affirms Attijariwafa Bank; Outlook Stable

(The following statement was released by the rating agency) LONDON, August 12 (Fitch) Fitch Ratings has affirmed Morocco-based Attijariwafa Bank's (AWB) Long-term foreign currency Issuer Default Rating (IDR) at 'BB+', Long-term local currency IDR at 'BBB-', National Long-Term Rating at 'AA-(mar)', 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 at the end of this comment. KEY RATING DRIVERS: IDRs, NATIONAL RATINGS, SUPPORT RATING AND SUPPORT RATING FLOOR AWB's IDRs, National Ratings, SR and Support Rating Floor (SRF) reflect Fitch's opinion that the Moroccan authorities would have a high propensity to support AWB if needed, given the bank's strong franchise in the country. AWB is a leading domestically-owned corporate and retail bank in Morocco, with a leading market share in retail domestic banking (28%). However, Fitch views the probability of support to be only moderate given Morocco's financial strength (BBB-/Stable). AWB's Long-term IDRs have a Stable Outlook, reflecting the Moroccan sovereign's Outlook. 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 was severely downgraded. RATING DRIVERS: VIABILITY RATING AWB's VR reflects its moderate asset quality given its high loan book concentration, high related-party lending and exposure to fragile economic environments (at end-2012, 6% of AWB's assets were held in Tunisia, and 12% in various sub-Saharan African countries). The VR also takes into account AWB's tight liquidity albeit comparable with other Moroccan banks. It also reflects the bank's strong domestic market presence, satisfactory profitability, which is under pressure, and modest capitalisation. AWB's asset quality is moderate. Impaired loans continued to increase in 2012 (by around 11%), reflecting some economic pressures in Morocco, weak economic activity in Tunisia, and political instability in some sub-Saharan African countries. Fitch expects impaired loans to keep on rising in 2013, albeit only moderately, due to persistent economic uncertainties in these countries. High obligor concentration in AWB's loan book represents a material credit risk. Nevertheless this concentration reflects, to some extent, the concentration of the Moroccan economy and AWB's high market shares. These large exposures include related party lending (which accounted for 35% of AWB's Fitch core capital at end-2012), which Fitch considers a rating weakness. Fitch considers AWB's liquidity as tight. AWB's liquidity was weakening since 2007 as loans grew at a faster pace than deposits in Morocco (as was the case for the overall banking sector), but since June 2012 this trend appears to have reversed as AWB's deposits have been growing at a faster pace than loans. Fitch considers that AWB's cushion of available liquid assets (MAD16.9bn of assets available for repurchase agreements with the Moroccan central bank) is only moderate given its short-term wholesale funding needs. Liquidity at AWB's foreign subsidiaries is adequate, but non-fungible. Fitch considers AWB's capital ratios (Fitch core capital ratio of 8.2% and core Tier 1 capital ratio of 9.1% at end-2012) are modest, albeit improving, given the high concentrations in its loan book and its exposure to volatile economic and political markets. AWB's core Tier 1 capital ratio will continue to be supported by its retained earnings and cash injections in 2013/2014, but will nevertheless remain close to the 9% regulatory minimum. AWB's resilient profitability is mainly due to Moroccan political stability and the relatively sound performance of the Moroccan economy. Fitch believes that AWB's profitability will be constrained in 2013 by lower than historical loan growth, high competition, and possibly higher funding costs in Morocco. RATING SENSITIVITIES - VR A deterioration of AWB's liquidity position or insufficient capitalisation, for example as a result of significant asset quality deterioration, could trigger a downgrade of AWB's VR. Potential corporate governance issues limit the upside potential to 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: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available on Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 15 August 2012, 'National Ratings Criteria', dated 19 January 2011, and 'Evaluating Corporate Governance', dated 12 December 2012, are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Ratings Criteria here Evaluating Corporate Governance 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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