Fitch Affirms Jordan's Cairo Amman Bank's Support Rating at '3'

Fitch Ratings-London-06 February 2012: Fitch Ratings has affirmed Jordan-based Cairo Amman Bank's (CABK) Support Rating at '3'.

The rating reflects the moderate probability of support from the Jordanian authorities, based on CABK's good local franchise and the government's supportive stance towards the domestic banking system. In Fitch's view, the state of Jordan has a strong propensity to support the bank. However, potential support is moderated by possible constraints on its ability to do so.

CABK's operating profit increased by 11% yoy in 9M11, on the back of stronger revenue generation and despite the challenging local operating environment. Short-term profitability prospects are approximately flat, as intensifying competition in the banking sector adds pressure to margins.

Asset quality has remained fairly stable since end-2008, underpinned by solid performance in domestic retail lending. Non-performing loans (NPLs) reached 5% of gross loans at end-9M11 (end-2010: 4.1%); with NPL increases emanating largely from corporate exposures, reflecting sector-wide difficulties in such lending. Reserve coverage of impaired loans is sound (102% at end-9M11) and is significantly above the sector average.

The bank's liquidity position is a strength, supported by historically stable customer deposits, which accounted for 84% of non-equity funding at end-9M11. Capitalisation is satisfactory and complies with local regulatory requirements, although capital adequacy indicators do lag the sector average. The Fitch core capital ratio was 17.1% at end-9M11.

CABK is a mid-sized commercial bank, with domestic market shares of 5% in loans and 4% in deposits (at end-9M11); it also has a notable presence in the Palestinian territories. The bank's main shareholders are the Al-Masri and Al-Talhouni family-owned business groups, holding 29.5% and 17.2% stakes, respectively.

Additional information is available at www.fitchratings.com. The ratings above were unsolicited and have been provided by Fitch as a service to investors.

Applicable criteria, "Global Financial Institutions Rating Criteria", dated 16 August 2011, are available at www.fitchratings.com.

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. 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.

For more information, please contact:
Primary Analyst
Zubaida El-Muttardi
Analyst
+44 20 3530 1192
Fitch Ratings Limited
30 North Colonnade
London, E14 5GN

Secondary Analyst
Laila Sadek
Director
+44 20 3530 1308

Committee Chairperson
Michael Steinbarth
Senior Director
+44 20 3530 1367

Media Relations:
Michelle James, London
Tel: +44 0203 530 1574
Email: Michelle.James@fitchratings.com.