PRESS RELEASE: Fitch Affirms Arab Tunisian Bank's IDR At BBB+
Monday November 24th, 2008 / 18h54
Fitch Ratings-London/Paris/Tunis-24 November 2008: Fitch Ratings has today affirmed Arab Tunisian Bank's (ATB) Long-term foreign and local currency Issuer Default ratings (IDRs) at 'BBB+'. The Short-term local and foreign currency IDRs are affirmed at 'F2'. The Outlooks on both the Long-term foreign and local currency IDRs are Stable. ATB's Individual and Support ratings are affirmed at 'D' and '2', respectively. The bank's National Long- and Short-term ratings are affirmed at 'AA(tun)' and 'F1+(tun)', respectively. The Outlook on the National Long-term rating is Stable. ATB's IDRs, Short-term and Support ratings are driven by a high probability of support from its majority shareholder, Arab Bank plc (AB; 'A-'(A minus)/ 'F1'; Individual Rating 'B'; Support Rating '5'), which controls a 64.2% stake in ATB. ATB's Individual rating considers its acceptable profitability and healthy liquidity. However, it also factors in problems in asset quality, concentration in the funding base and stretched capital. ATB's business mix continued to be profitable in 2007 and H108, with ROE and ROA at an approximate 14% and 1% respectively in H108. Revenue growth continued to be fuelled by ATB's active lending business and government securities investments. However, loan loss provision charges are still weighing down profitability as they accounted for 36% of pre-provision operating profit in 2007 and H108, a trend which is likely to persist in the short term given the bank's need to improve loan loss reserves. Fitch notes that ATB's risk management has been gradually strengthened since 2002, in coordination with AB, although there is room for further progress. Asset quality remains weak by international standards. At end-H108, gross impaired loans represented 14% of gross loans and net impaired loans/eligible capital stood at 35%. Concentration risk per obligor is high. ATB's funding is predominantly sourced from its customer base, with high deposit concentration. However, liquidity is satisfactory and tightly controlled by AB. It is also supported by ATB's ability to call on AB's credit lines in case of stress. Fitch eligible capital and Tier 1 ratios (both at 8.78% at end-H108 under Basel I) appear tight. The two rights issues (TND20m each) planned for December 2008 and for 2010 are expected to boost ATB's Tier 1 ratio to a minimum 10%. ATB is a medium-sized Tunisian bank, providing a full range of retail banking services through 84 branches. It held a 8.9% market share of deposits and a 5.9% share of credit at end-2007. Contact: Sonia Trabelsi, Tunis, Tel: +216 71 840 902; Philippe Lamaud, Paris: +33 1 44 29 2126. Media Relations: Hannah Warrington, London, Tel: +44 (0) 207 417 6298, Email: hannah.warrington@fitchratings.com. Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tun)' for National ratings in Tunisia. Specific letter grades are not therefore internationally comparable. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=XArlKZdU3IpnWbzCSPbKCA%3D%3D. You can use this link on the day this article is published and the following day.
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