28 February 2011
Capital Intelligence (CI), the international credit rating agency, today announced that it has assigned a 'Negative' Outlook to Arab Tunisian Bank's (ATB) 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. ATB's Long and Short-Term Foreign Currency ratings are affirmed at 'BB+' and 'A3' respectively. The Financial Strength rating was also affirmed at 'BB+', as was the Bank's Support rating of '3'.
ATB displays a good level of liquidity, particularly in the context of the Tunisian banking sector. The Bank's balance sheet contains a relatively large portfolio of treasury bills, with loans forming a smaller than peer-group average proportion of total assets, despite the robust increase in loans to June 2010. In part, ATB's asset mix has a negative impact on ATB's interest differential which is very low, and by some way the weakest in the peer group. This is mainly a result of low levels of income earned on assets.
Profitability has nonetheless been good over the last few years and the performance to end-June 2010 again showed improvement. One possible challenge going forward in its earnings channels is the large reliance on non-interest income, specifically securities dealing. That said, it has achieved a long-term track record of high income from this source. Capital adequacy is sound at the current level. ATB still possess a high amount of nonperforming loans (NPLs), although ratios are below the sector average. Moreover, ATB has good provisioning coverage in place.
The recent 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. ATB's profitability could be weaker in 2011 on the back of possible asset quality deterioration and limited asset expansion. ATB may experience a slightly higher than average increase in NPLs due to the fact that loans have increased briskly over the past one to two years.
ATB was established in June 1982 as the locally-incorporated successor to the Tunis branch of Arab Bank PLC (AB), which had operated in the country since 1952. The Jordan-based parent holds 64% of the equity of the Bank, and private Tunisian investors hold the remainder. With assets totaling TND3,697mn (USD2,694mn) at end-June 2010, ATB is a medium-sized bank operating in the domestic banking sector. Co-operation with the parent has grown over the years with corresponding benefits for ATB, particularly access to AB's technology and systems.
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 access to the accounts but no 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 February 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
Capital Intelligence (CI), the international credit rating agency, today announced that it has assigned a 'Negative' Outlook to Arab Tunisian Bank's (ATB) 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. ATB's Long and Short-Term Foreign Currency ratings are affirmed at 'BB+' and 'A3' respectively. The Financial Strength rating was also affirmed at 'BB+', as was the Bank's Support rating of '3'.
ATB displays a good level of liquidity, particularly in the context of the Tunisian banking sector. The Bank's balance sheet contains a relatively large portfolio of treasury bills, with loans forming a smaller than peer-group average proportion of total assets, despite the robust increase in loans to June 2010. In part, ATB's asset mix has a negative impact on ATB's interest differential which is very low, and by some way the weakest in the peer group. This is mainly a result of low levels of income earned on assets.
Profitability has nonetheless been good over the last few years and the performance to end-June 2010 again showed improvement. One possible challenge going forward in its earnings channels is the large reliance on non-interest income, specifically securities dealing. That said, it has achieved a long-term track record of high income from this source. Capital adequacy is sound at the current level. ATB still possess a high amount of nonperforming loans (NPLs), although ratios are below the sector average. Moreover, ATB has good provisioning coverage in place.
The recent 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. ATB's profitability could be weaker in 2011 on the back of possible asset quality deterioration and limited asset expansion. ATB may experience a slightly higher than average increase in NPLs due to the fact that loans have increased briskly over the past one to two years.
ATB was established in June 1982 as the locally-incorporated successor to the Tunis branch of Arab Bank PLC (AB), which had operated in the country since 1952. The Jordan-based parent holds 64% of the equity of the Bank, and private Tunisian investors hold the remainder. With assets totaling TND3,697mn (USD2,694mn) at end-June 2010, ATB is a medium-sized bank operating in the domestic banking sector. Co-operation with the parent has grown over the years with corresponding benefits for ATB, particularly access to AB's technology and systems.
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 access to the accounts but no 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 February 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
