Fitch Ratings and its Cairo based subsidiary Nile Ratings, has downgraded Al-Watany Bank of Egypt's (AWB) national long and short-term ratings to BBB- and F3 from BBB+ and F2. At the same time, the national ratings have been placed on Rating Watch Negative. The support rating remains at 5T.
The rating action reflects concern over AWB's weakening profitability, asset quality and capital adequacy trends. For the nine months ended September 2002 profitability was 67 percent lower than for the corresponding year and it is Fitch's expectation that reported profitability will show further weakness.
Contributing factors have been deteriorating asset quality and high funding costs that have impacted on capital adequacy levels.
In a challenging environment the Negative Rating Watch denotes uncertainty regarding year 2002 results, the profitability outlook, asset quality and capital adequacy. These negative factors are balanced by new management efforts to restructure the bank.
AWB is a small bank that has seen rapid growth during the past few years. Ranked 17th in Egypt in terms of total banking system assets with market shares of sector deposits and loans of just above one percent each, it offers commercial banking services to the SME market, traditionally its core business.
Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with sub or low-investment grade international sovereign ratings. The best risk within a country is rated AAA and other credits are rated only relative to this risk. Specific letter grades are not internationally comparable. — (menareport.com)
© 2003 Mena Report (www.menareport.com )