Standard & Poor (S&P)'s Ratings Services has assigned its BB- long-term and B short-term counterparty credit ratings to Arab Tunisian Bank (ATB). At the same time the agency withdrew its BBpi rating on the bank and assigned a stable outlook.
"The ratings reflect the bank's majority ownership by Jordan-based Arab Bank and its satisfactory commercial profile," said S&P's credit analyst Ekaterina Trofimova.
These elements are offset by the bank's weak asset quality, limited capitalization, and relatively low profitability by international standards. Additionally, the bank's limited size is a disadvantage in facing domestic competition.
With assets totaling 1.16 billion Tunisian dinars ($851 million) at June 30, 2003, and a network of 34 branches, ATB is the ninth-largest bank in Tunisia. S&P's believes that ATB's size, as well as its asset quality, will continue to be its main weaknesses in the near future.
Although ATB's asset quality is slightly better than the domestic average, it is weak by international standards due to the relatively high risk of the Tunisian economy. Similarly, ATB's profitability is adequate in a domestic context, but remains relatively low by international standards.
ATB's liquidity position is also adequate, supported by its net lender position on the interbank market. The expansion of loans and contract maturities will make liquidity management more challenging, however.
"The potential for a higher credit ratings depends on ATB improving asset quality and increasing profitability by optimizing its cost structure and enhancing core revenue generation, and also hinges on the bank achieving stronger capitalization and on improvements in the still risky economic and financial environment in Tunisia," added Trofimova. — (menareport.com)
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