Capital Intelligence (CI), the international credit rating agency, today announced that it has assigned a 'Negative' Outlook to Union Bancaire pour le Commerce et l'Industrie's (UBCI) Foreign Currency ratings, as well as to its Financial Strength rating. The rating action reflects the challenging operating environment in Tunisia and the attendant risks to economic and financial performance. UBCI's Long and Short-Term Foreign Currency ratings were affirmed at bbb- and a3 respectively. The Financial Strength rating was also affirmed at bb+.
The financial profile of UBCI is reasonable but challenges exist, particularly in respect of asset quality. The Bank's profitability is respectable, with revenue driven by good sources of net interest and non-interest income. UBCI benefits from a low cost of funds and, in turn, the highest interest differential in the peer group. The Bank's funding profile is satisfactory, with the majority of funding provided by stable customer deposits. UBCI's liquidity position is considered adequate both on an intrinsic basis and externally in view of the likely support of BNP Paribas. The ratio of NPLs to gross loans fell in the period to June 2010, but the overall level remains high and management need to continue focusing on reducing it. UBCI's capital position is currently adequate.
The recent political turmoil in Tunisia will have negative implications for the economy, at least over the next twelve months. Economic growth will be lower than previously forecast and there remains more risk to the downside. Key economic sectors will be hit and will likely be a source of new NPLs going forward. UBCI's profitability, as is the case with the Tunisian banking sector, could come under pressure in 2011 on the back of possible asset quality deterioration and limited asset expansion.
Union Bancaire pour le Commerce et l'Industrie was established in 1961 and is 50% owned by France's BNP Paribas Group (BNPP); the remainder is widely held by local private investors. BNPP has held its stake for many years. BNPP provides four members of top management, specifically the Directeur-Général (Chief Executive Officer and Managing Director), the Secrétaire-Général, and the heads of marketing and audit. BNPP further provides significant input to UBCI's risk management practices, policies and procedures. UBCI's deposits stood at TND1,663mn at end 2010 with loans of TND1,594mn.
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CONTACT
Primary Analyst
Darren Stubing
Senior Adviser
Tel: +357 2534 2300
Email: darren.stubing@ciratings.com
Secondary Analyst
Thomas Kenzik
Senior Credit Analyst
Email: tom.kenzik@ciratings.com
Rating Committee Chairman
Morris Helal
Senior Credit Analyst
The ratings have been initiated by Capital Intelligence. The issuer did not participate in the rating process. The information source(s) used to prepare the credit ratings is public information. Capital Intelligence had/did not have access to the accounts of the issuer for the purpose of the rating and considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.
The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in January 1996. The ratings were last updated in January 2010.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com.
© Press Release 2011
