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Banque de Tunisie's Ratings Action

Capital Intelligence (CI), the international credit rating agency, today announced that it has assigned a 'Negative' Outlook to Banque de Tunisie 's ( BT ) Foreign Currency ratings, as well as to its Financial Strength rating. The rating action reflects the uncertain political situation and the attendant risks to economic and financial performance. BT 's Long and Short-Term Foreign Currency ratings were affirmed at 'BBB' and 'A3' respectively. The Financial Strength rating was also affirmed at 'BBB+', as was the Bank's Support rating of '3'.

BT continues to record the best profitability in the Tunisian banking sector. This is driven by relatively good loan asset quality, a still healthy albeit tightening margin, and a very low operating expense base.
Although loan asset quality remains considerably ahead of the peer group and sector, some pressure has been felt over the past two years. Loan-loss coverage has also weakened on the back of the rise in bad loans, but remains adequate overall. The Bank's healthy capital adequacy ratio also provides a good buffer against any potential large loss. Moreover, BT 's good performance at the operating profit level gives it the capacity and flexibility to make further provisions as necessary.

Liquidity is, however, on the tight side as strong loan growth over the two-year period to end-June 2010 has outpaced deposit growth. The Bank's liquid asset base, which is weaker than the peer group average, provides only a limited liquidity buffer. BT has a good deposit base but the ratio of net loans to both customer deposits and to stable funds is on the high side.

The recent turmoil in Tunisia will have negative implications for the economy, at least over the next year. Economic growth will be lower than previously forecast and there remains more risk to the downside. Key economic sectors such as tourism will be hit hard and this could be a source of new non-performing loans going forward for the sector. It is expected that BT 's profitability will be weaker in 2011 on the back of possible asset quality deterioration and little asset expansion.

The oldest bank operating in the Tunisian sector, Banque de Tunisie ( BT ) was established in 1884 during the French protectorate. Local private investors acquired majority ownership of the Bank in 1967.

Shareholders comprise principally local private investors, with the rest accounted for by Crédit Industriel et Commercial de Paris Group (20% - a stake acquired some years ago), and foreign pension funds (about 5%). By capital, BT is Tunisia's second-largest private bank and seventh-largest bank overall by assets with a market share of around 8%. At end-June 2010, total assets amounted to TND2,873mn
(USD2,094mn).

- Ends -

For more information, please contact:
Primary Analyst
Darren Stubing
Senior Adviser
Tel: +357 2534 2300
E-mail: darren.stubing@ciratings.com

Secondary Analyst
Tom Kenzik
Senior Credit Analyst
E-mail: tom.kenzik@ciratings.com

Rating Committee Chairman
Tom Kenzik
Senior Credit Analyst2

The ratings have been initiated by Capital Intelligence. However, the issuer participated in the rating process. The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence had to the accounts but not other relevant internal documents of the issuer for the purpose of the rating, but 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 1994. 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