(The following statement was released by the ratings agency)
Jan 14 Fitch Ratings has affirmed Morocco-based
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.
RATING DRIVERS AND SENSITIVITIES: IDRs, NATIONAL RATINGS,
SUPPORT RATING AND SUPPORT RATING FLOOR
AWB's IDRs, National Ratings, Support Rating 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 strong market shares in retail domestic banking.
Nevertheless, Fitch considers the probability of support to be
moderate given Morocco's financial strength ('BBB-'/Stable).
AWB's Long-term IDRs have a Stable Outlook, reflecting the
Moroccan sovereign's Outlook. The IDRs and SRF would move in
tandem with Morocco's sovereign ratings. The Support Rating is
sensitive to any change in Fitch's view of the authorities'
willingness or ability to support the bank. AWB's National
Ratings would be revised downward if the sovereign was severely
RATING DRIVERS AND SENSITIVITIES: VIABILITY RATING
AWB's VR reflects its moderate asset quality, high
related-party lending, exposure to fragile economic environments
(at end-H112, 6% of AWB's assets were held in Tunisia, and 12%
in various sub-Saharan African countries) and decreasing
liquidity. It also takes into account its strong domestic market
presence, satisfactory and stable profitability, and modest
A deterioration of AWB's liquidity position or insufficient
capitalisation as a result of significant asset quality
deterioration could trigger a downgrade of AWB's VR. Potential
corporate governance issues limit AWB's VR.
AWB's liquidity has been weakening since 2007 as loans have
grown at a faster pace than deposits in Morocco (as in the
overall Moroccan banking sector). Fitch considers that AWB's
cushion of available liquid assets (securities available for
repurchase agreements with the Moroccan central bank) is
moderate at the Moroccan entity. Liquidity at AWB's foreign
subsidiaries is adequate, but non fungible.
AWB's asset quality is moderate. Impaired loans accounted
for 4.9% of gross loans at end-H112. Increasing impaired loans
in H112 reflected some deterioration in Morocco and Tunisia and
political instability in some sub-Saharan African countries.
Fitch expects NPLs to rise moderately in 2013, due to economic
uncertainties in Tunisia and some of the sub-Saharan African
High obligor concentration in AWB's loan book represents a
material credit risk although it reflects, to some extent, the
concentration of the Moroccan economy and AWB's significant
market shares. The high related-party exposure in the loan book
exceeded 50% of AWB's Fitch Core Capital at end-H112 (or 34% of
total equity). In Fitch's view, although this related- party
exposure may reflect the concentration in the Moroccan economy,
Fitch considers it as a rating weakness.
In Fitch's opinion, AWB's capitalisation is modest and it is
undermined by its high concentrations in the loan book and
exposure to volatile economic environments. AWB's capital ratios
(Fitch core capital of 7.5% and Tier 1 capital ratio of 8.6% at
end-H112) will continue to be supported by its retained earnings
and cash injections in 2013. Nevertheless the regulatory capital
ratios will just meet the new minimum regulatory requirements in
2013 in Morocco: Tier 1 capital ratio of 9% and Total capital
ratio of 12%.
AWB's resilient profitability is mainly due to Moroccan
political stability and the relatively good performance of the
Moroccan economy. Fitch believes that AWB could achieve stable
revenue growth in 2013 although this could be constrained by
higher funding costs, given current liquidity issues in the
Moroccan banking sector.
The rating actions are as follows:
Long-term foreign currency IDR: affirmed at 'BB+'; Outlook
Short-term foreign currency IDR: affirmed at 'B'
Long-term local currency IDR: affirmed at 'BBB-'; Outlook
Short-term local currency IDR: affirmed at 'F3'
National Long-term Rating: affirmed at 'AA-(mar)'; Outlook
National Short-term Rating: affirmed at 'F1+ (mar)'
Support Rating: affirmed at '3'
Support Rating Floor: affirmed at 'BB+'
Viability Rating: affirmed at 'bb-'