Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed the ratings of Banque Internationale Arabe de Tunisie (BIAT), based in Tunis, Tunisia. The Long-term Foreign Currency rating is affirmed at 'BB+', and the Short-term Foreign Currency rating at 'B'. The Bank's Financial Strength Rating is maintained at 'BB+', constrained by a still high level of non-performing loans (NPLs), modest bottom line returns and low capital adequacy but supported by good liquidity, robust operating profit and adequate provisioning coverage. All ratings are maintained on a 'Negative' Outlook, however, due to the still significant challenges in the operating environment and, particularly in respect of the Financial Strength Rating, possible further deterioration in asset quality. The Support Rating is affirmed at '4', reflecting a moderate level of support.
| Foreign Currency | Financial Strength | Support | Outlook | ||
| LT | ST | FC | FSR | ||
| BB+ | B | BB+ | 4 | Negative | Negative |
BIAT is one of the leading private-sector banks in Tunisia, possessing a well established franchise. It controls around 10% of sector assets; in customer deposits, however, it holds the leading position, with a 15% market share. Its customer deposit base provides the Bank with a low cost of funds which translates into a relatively wide interest differential.
BIAT's performance in 2010 was reasonable with a slight improvement in asset quality. Profit and returns did fall, however, due to much higher provisioning and tax charges. At the operating level, profit was good. As is the case for all banks in Tunisia, BIAT has been impacted by the revolution which occurred in January 2011. The economy has been hit hard, with both the corporate and retail sectors impacted. BIAT's non-performing loans rose in H1 2011 due to the downturn. Nonetheless, the rise was not significant. Going forward, it is expected that classified loans will rise further at least for the remainder of this year and next.
Supporting the Bank's financial position is its good liquidity profile, with a sector-high level of customer deposits as well as a good base of liquid assets. Its comfortable liquidity profile is in contrast to the peer group and sector overall, which displays very tight liquidity. BIAT's capital position is considered low however, and the Bank would benefit from an enhanced position. Its low position will restrict it going forward, particularly in terms of asset growth.
BIAT was established in 1976 by a consortium of investors composed of local institutions and individuals as well as Arab and European banks, who acquired the domestic branches of the British Bank of the Middle East and Société Marseillaise de Crédit. As at 2010, BIAT was the second largest bank by total assets in Tunisia behind state-owned Société Tunisienne de Banque. It is a full-service bank, offering corporate banking services as well as consumer banking through a 138-branch network, staffed by a total of 2,385 people at end 2010.
The main local private investor is the well-known Tunisian group Mabrouk, which has an ownership interest in BIAT of over 38%. Mr. Ismail Mabrouk is a director in BIAT and president of its board. The Mabrouk group operate in many sectors including financial services, insurance, tourism, cars sales, food, and distribution networks (Monoprix and Geant brands).
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Primary Analyst:
Darren Stubing
Senior Advisor
Tel: +357 25 342300
darren.stubing@ciratings.com
Secondary Analyst:
Thomas Kenzik
Senior Credit Analyst
tom.kenzik@ciratings.com
Rating Committee Chairman:
Morris Helal
Senior Credit Analyst
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 and other relevant internal documents 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 December 1993. 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
