(The following statement was released by the rating agency) Feb 8 – Fitch Ratings has affirmed Attijariwafa Bank’s (AWB) Long-term foreign currency Issuer Default Rating (IDR) at ‘BB+’, Short-term foreign currency IDR at ‘B’, Viability Rating (VR) at ‘bb-‘ and Support Rating at ‘3’. The Outlook on the bank’s Long-term IDR is Stable. A full list of rating actions is at the end of this comment. AWB’s IDRs are based on the potential support expected from the Moroccan authorities if needed, given the bank’s strong franchise in the country. AWB is Morocco’s largest bank by total assets (which accounted for around 41% of Morocco’s GDP at end-H111). Nevertheless, Fitch views the probability of support as moderate considering Morocco’s (‘BBB-‘/Stable) financial strength. AWB’s VR reflects the bank’s high obligor concentrations (the bank’s 20 largest obligors on- and off- balance sheet amounted to 2.3x AWB’s Fitch core capital at end-H111), potential corporate governance issues arising from related party lending, decreasing liquidity and fairly weak capitalisation. The rating also considers the bank’s satisfactory profitability and revenue generation supported by its diversified business mix and strong market presence. AWB’s asset quality indicators remain in line with local peers and net impaired loans were moderate at 11.37% of equity at end-H111. Nevertheless, high obligor concentration in the loan portfolio exposes the bank to rapid asset quality deterioration in case of an economic downturn. In addition, the largest 20 obligors included two related parties with exposures of above 10% each. AWB’s liquidity indicators have been decreasing since 2007, driven by the stronger loan growth compared to customer deposits which are traditionally the bank’s main funding source (71% of non-equity funding at end-H111). AWB’s loan to deposits ratio was 108.6% (103.3% at end-H111 if certificate of deposits placed with clients are included). Use of market funding is increasing. Pressure on AWB’s funding and liquidity, similarly to the overall banking sector, since end-2010 have been eased by the support from the Moroccan central bank which provides refinancing facilities backed by eligible Moroccan securities. Fitch views AWB’s capitalisation, with a Fitch core capital at 7.46% at end-H111, as fairly weak given the bank’s risk profile and growth strategy. Nonetheless AWB does not exclude a capital increase in 2012. The rating actions are as follows: Long-term foreign currency IDR: affirmed at ‘BB+’; Outlook Stable Short-term foreign currency IDR: affirmed at ‘B’ Long-term local currency IDR: affirmed at ‘BBB-‘; Outlook Stable Short-term local currency IDR: affirmed at ‘F3’ National Long-term Rating: affirmed at ‘AA-(mar)’; Outlook Stable National Short-term Rating: affirmed at ‘F1+(mar)’ Viability Rating: affirmed at ‘bb-‘ Support Rating: affirmed at ‘3’ Support Rating Floor: affirmed at ‘BB+’ (Caryn Trokie, New York Ratings Unit)
…
