Business Standard
by Matthew Amlôt
Capital Intelligence (CI) today announced that it has affirmed the ratings of Attijariwafa Bank (AWB), based in Casablanca, Morocco.
AWB’s Financial Strength Rating is affirmed at ‘BBB’, supported by AWB’s overall financial profile, including full loan-loss coverage, adequate capital, reasonable profitability, and a good level of liquidity.
“The rating is constrained by the increase in non-performing loans (NPLs) and still challenging economic conditions. The Outlook for the Financial Strength Rating (FSR) is ‘Stable’. AWB’s Long-Term and Short-Term Foreign Currency Ratings are maintained at ‘BBB-’ and ‘A3’ respectively, with a ‘Stable’ Outlook. AWB’s Foreign Currency Ratings are constrained by CI’s internal assessment of sovereign credit risk. The Support Rating is maintained at ‘2’, reflecting the Bank’s strong ownership profile, together with the Bank’s dominant banking franchise and the very high likelihood of support from the authorities in case of need.
“AWB is the leading bank in Morocco and possesses a very strong domestic banking franchise with a market share of around one-quarter of sector assets, loans and deposits. It has very good management in place and strategies are clear and well defined. AWB’s financial performance has been sound for some years. The Bank’s asset quality is adequate, but NPLs continue to rise due to the challenging operating environment, with some pressure within the corporate customer loan segment. However, the rate of increase in NPLs fell in 2014 and only a moderate rise is expected in 2015. Moreover, coverage has strengthened; in 2014 the Bank channeled high gains from its securities portfolio to raise both specific and general provisions.
“Other areas of the Bank’s financial profile are all sound. Its capital position is adequate while its liquidity position is good. Liquidity improved again in 2014 with AWB recording a solid rise in customer deposits which was above the sector growth rate. With weak loan growth, loans to customer deposits and to stable funds both improved. Its liquid assets base, mainly Moroccan treasury bills, remains significant at around one-third of the balance sheet.
“AWB’s profitability has been reasonable for some years, and its performance improved in 2014. This mainly reflected high gains from its government securities portfolio as the yield curve moved advantageously in 2014. The Bank’s performance at the operating level remains adequate. Performance at the consolidated level remained sound although a slightly higher level of NPLs exists.”
