Global Arab Network | Positive outlook assigned to Arab Tunisian bank

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Positive outlook assigned to Arab Tunisian bank

Global Arab Network - - Hannan Taha

Thursday, 18 March 2010 11:58

Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed the Foreign Currency ratings of Tunisia's Arab Tunisian Bank at BB+ (Long-term) and A3 (Short-term), and the Financial Strength rating at BB+. The Support rating was adjusted to 3 from 2 previously. Due to Arab Tunisian Bank's (ATB) improved financial position in regard to capital adequacy, continued good liquidity and sound earnings, the Outlook was raised to Positive from Stable for both the Foreign Currency ratings and Financial Strength rating.
ATB was established in June 1982 as the locally-incorporated successor to the Tunis branch of Arab Bank plc, which had operated in the country since 1952. The Jordan-based parent holds 64% of the equity of the Bank, and private Tunisian investors hold the remainder.

ATB possesses a good level of liquidity, particularly in the context of the Tunisian banking sector. The Bank's balance sheet contains a large portfolio of treasury bills with loans forming a relatively modest proportion of total assets. This prudent profile negatively impacts ATB's interest differential which is very low, mainly a result of low levels of income earned on assets. Profitability has nonetheless been quite good over the last few years and the performance to end-June 2009 was sound. One possible weakness in its earnings channels is the large reliance on non-interest income, specifically securities dealing. That said, it has achieved a long-term record of high income from this source.

Capital adequacy improved to end-June 2009 through increased capital and lower risk-weighted assets. ATB still possesses a high level of non-performing loans (NPLs) although ratios are some way below the Tunisian sector average. Moreover, ATB has in place good provisioning coverage against NPLs.

With assets of USD2,446mn (TND3,305mn) at end-June 2009, ATB is a medium-sized bank operating in the domestic banking sector. Co-operation with the parent has grown over the years with corresponding benefits for ATB, particularly access to Arab Bank's technology and systems.

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