27 June 2008
Fitch Ratings, London/Tunis - Fitch Ratings has today affirmed Algeria-based BNP Paribas El Djazair's (BNPP El Djazair) National ratings at Long-term 'AAA(dza)' and Short-term 'F1+(dza)'. The Outlook on the National Long-term rating remains Stable. BNPP El Djazair's Support rating is affirmed at '3'.
BNPP El Djazair's National and Support ratings are underpinned by the support it can expect from its main shareholder, BNP Paribas (BNPP, rated 'AA'/Outlook Stable/'F1+'), which controls 100% of its capital. BNPP is highly committed to the development of retail banking in Algeria. Given BNPP's high capacity and strong history of support to group entities, Fitch believes that BNPP has a high propensity to support BNPP El Djazair if necessary. However, considering that this support is capped by the still fragile Algerian economic environment, the probability of such support is considered as only moderate.
The bank's strategy is to become a leading private bank in Algeria, mainly through organic growth, although acquisitions are considered as opportunities arise. The bank intends to grow its balance sheet by 30% and aims to more than double its network to 100 branches by end-2010. Corporate banking will remain a strong driver for expansion, while the bank intends to strengthen its retail business with mortgage, consumer finance and insurance products.
BNPP El Djazair is closely integrated with BNPP, which has seconded key senior managers. IT systems and credit risk tools are provided by BNPP, and risk management procedures comply with the parent's guidelines. Asset quality is acceptable, with impaired loan and loan loss coverage ratios of 3% and 92%, respectively, at end-2007. Asset quality deterioration is likely given the bank's strong loan growth in a fragile economic environment, although Fitch takes comfort from BNPP's strong credit risk culture.
Strong profitability is boosted by the bank's rapid loan growth and rising trade finance activities. Loan loss provision charges are controlled due to tightened procedures introduced in 2006. Operating expenses are expected to continue to rise in 2008 as a result of investment in human resources, branches and IT infrastructure.
Liquidity is satisfactory, with liquid assets totalling 16% of assets at end-2007. The ability to call on BNPP is also a comfort. Access to longer-term funding will be tested in a DZD10bn medium-term bond issue planned for end-2008, mainly to fund BNPP El Djazair's new head office and to reduce maturity gaps. Capitalisation is sound despite rapid loan growth, with a Basel I capital adequacy ratio of 17.2% at end-Q108 and Tier 1 ratio of 16%. Future capital injections by BNPP (DZD6.5bn by end-2010, including DZD1bn in 2008) should prevent the Tier 1 ratio declining below the bank's 10% limit.
BNPP El Djazair is the third-largest private bank by total assets in Algeria. It operated 41 branches in the country at end-May 2008 and held less than a 2% share each of deposits and loans, and a higher 15% of trade finance transactions.
- Ends -
About Company:
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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:
Sonia Trabelsi
Tunis
Tel: +216 71 840 902
Anna Van Zoest
London
Tel: 44 207 682 7353
Peter Fitzpatrick
London
Tel: + 44 (0)20 7417 4364
Fitch Ratings, London/Tunis - Fitch Ratings has today affirmed Algeria-based BNP Paribas El Djazair's (BNPP El Djazair) National ratings at Long-term 'AAA(dza)' and Short-term 'F1+(dza)'. The Outlook on the National Long-term rating remains Stable. BNPP El Djazair's Support rating is affirmed at '3'.
BNPP El Djazair's National and Support ratings are underpinned by the support it can expect from its main shareholder, BNP Paribas (BNPP, rated 'AA'/Outlook Stable/'F1+'), which controls 100% of its capital. BNPP is highly committed to the development of retail banking in Algeria. Given BNPP's high capacity and strong history of support to group entities, Fitch believes that BNPP has a high propensity to support BNPP El Djazair if necessary. However, considering that this support is capped by the still fragile Algerian economic environment, the probability of such support is considered as only moderate.
The bank's strategy is to become a leading private bank in Algeria, mainly through organic growth, although acquisitions are considered as opportunities arise. The bank intends to grow its balance sheet by 30% and aims to more than double its network to 100 branches by end-2010. Corporate banking will remain a strong driver for expansion, while the bank intends to strengthen its retail business with mortgage, consumer finance and insurance products.
BNPP El Djazair is closely integrated with BNPP, which has seconded key senior managers. IT systems and credit risk tools are provided by BNPP, and risk management procedures comply with the parent's guidelines. Asset quality is acceptable, with impaired loan and loan loss coverage ratios of 3% and 92%, respectively, at end-2007. Asset quality deterioration is likely given the bank's strong loan growth in a fragile economic environment, although Fitch takes comfort from BNPP's strong credit risk culture.
Strong profitability is boosted by the bank's rapid loan growth and rising trade finance activities. Loan loss provision charges are controlled due to tightened procedures introduced in 2006. Operating expenses are expected to continue to rise in 2008 as a result of investment in human resources, branches and IT infrastructure.
Liquidity is satisfactory, with liquid assets totalling 16% of assets at end-2007. The ability to call on BNPP is also a comfort. Access to longer-term funding will be tested in a DZD10bn medium-term bond issue planned for end-2008, mainly to fund BNPP El Djazair's new head office and to reduce maturity gaps. Capitalisation is sound despite rapid loan growth, with a Basel I capital adequacy ratio of 17.2% at end-Q108 and Tier 1 ratio of 16%. Future capital injections by BNPP (DZD6.5bn by end-2010, including DZD1bn in 2008) should prevent the Tier 1 ratio declining below the bank's 10% limit.
BNPP El Djazair is the third-largest private bank by total assets in Algeria. It operated 41 branches in the country at end-May 2008 and held less than a 2% share each of deposits and loans, and a higher 15% of trade finance transactions.
- Ends -
About Company:
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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:
Sonia Trabelsi
Tunis
Tel: +216 71 840 902
Anna Van Zoest
London
Tel: 44 207 682 7353
Peter Fitzpatrick
London
Tel: + 44 (0)20 7417 4364
© Press Release 2008
