CPI Financial
by Matthew Amlôt
Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, today announced that it has affirmed the ratings of Attijariwafa Bank (AWB), based in Casablanca, Morocco. AWB’s Financial Strength Rating (FSR) is affirmed at ‘BBB’, supported by the Bank’s overall financial profile, including a solid level of capital, sound provisioning coverage, reasonable profitability, and a high level of liquidity.
The rating is constrained by the elevated level of non-performing loans (NPLs), weak asset growth, and still challenging economic conditions. The Outlook for the FSR is ‘Stable’. AWB’s Long- and Short-Term Foreign Currency Ratings (FCRs) are maintained at ‘BBB-’ and ‘A3’ respectively, with a ‘Stable’ Outlook, and for similar reasons.
AWB’s FCRs 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 its dominant banking franchise and the very high likelihood of support in case of need from the authorities.
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. Its performance, including in 2015, continues to be sound overall. AWB has very good management in place and strategies are clear and well-defined. Its financial performance profile remains solid. The Bank’s asset quality is adequate, but NPLs continue to rise due to the challenging operating environment in Morocco, with some pressure within the corporate customer loan segment. However, the rate of increase in NPLs fell sharply in 2015. Moreover, loan-loss coverage improved.
The Bank’s capital position is adequate with the capital adequacy ratio at a satisfactory level and showing consistently steady growth over the last few years. Its liquidity position is good. Liquidity improved once again in 2015 with AWB recording a moderate rise in customer deposits in conjunction with a fall in the loan book. Credit demand has been weak in Morocco for some time, although the sector overall did grow slightly in 2015. AWB followed a more cautious approach. The ratios of loans to customer deposits and to stable funds both improved. The Bank’s liquid assets base, mainly Moroccan treasury bills, remains significant at around one-third of the balance sheet and provides good support.
AWB’s profitability has been reasonable for some years. However, operating profitability declined in 2015 due mainly to a reduction in non-interest income. This was in part due to high gains booked in the previous year from its government securities portfolio as the yield curve moved advantageously. Nonetheless, asset growth remains weak thereby creating pressure. Overall returns remain comfortable and above the sector average. At the consolidated level, taking into account African and international operations, the performance also remained sound in 2015.
