Global Arab Network | Fitch Affirms Tunisia-based Union de Factoring Stable Outlook

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Fitch Affirms Tunisia-based Union de Factoring Stable Outlook

Global Arab Network - - Hannan Taha

Wednesday, 21 July 2010 22:45

Fitch Ratings has affirmed Union de Factoring's (Unifactor) National Long-term rating at 'BB(tun)' with a Stable Outlook and its National Short-term rating at 'B(tun)'.

Unifactor's ratings reflect poor, but improving asset quality, and tight liquidity. The ratings also factor in its improved capitalisation and profitability.

Unifactor's profitability recovered in 2009 following a weak 2008, when the bank reported a sizeable loss due to the recognition of large net loan loss provisions. This trend continued in H110. The 2010 capital increase (TND5m) allowed Unifactor to offset the negative impact of TND5.7m cumulative losses by end-2009 and its tier ratio to reach 23.17% at end-June 2010, which Fitch considers to be only adequate, given the company's weak asset quality. A further capital increase of the same amount is planned by end-2012.

Following a change in the company's top management in May 2009, new credit risk assessment and monitoring procedures were introduced at Unifactor aimed at addressing its asset quality issues. However, credit risk indicators, although improving at end-June 2010, remain weak due to Unifactor's stock of old impaired loans. Despite a strong effort in loan recoveries, the impaired loan ratio was at 18.6% at end-June 2010 and net impaired loans accounted for 17% of equity. Concentration risk per obligor remains high, but this is mitigated by diversification of exposures by receivable.

Unifactor's liquidity is deemed by Fitch as tight although this is mitigated by possible support from its bank shareholders.

At end-2009, the bulk of Unifactor's capital was held directly and indirectly by three local banks: Arab Tunisian Bank (rated 'BBB+'/Stable) 22%, Banque Nationale Agricole (13.7%) and Amen Bank (9.2%). Unifactor offers traditional factoring services: purchase with or without recourse, as well as financing and collection of domestic (95% in 2009), export and import invoices.

Global Arab Network

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network