Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmedthe Foreign Currency ratings of Yemen’s Tadhamon International Islamic Bank (TIIB) at B (Long-term)and B (Short-term) and the Financial Strength rating at BB-. However, the Support rating was adjustedto 4 from the previous level of 3. This downward adjustment reflects the more challenging domesticand regional operating environment and the likely impact this will have on the Bank’s owner and, interalia,its capacity to provide financial support, in case of need, to the Bank. The Outlook for all ratings isaffirmed at Stable.TIIB was established under the name of Yemen Islamic Bank for Investment and Development in 1995,changing its name to the present style in 2002. The majority of TIIB’s shares are held by directors,associates and member companies of the Yemen-based Hayel Saeed Anam (HSA) international group ofcompanies, Yemen’s largest private sector conglomerate. Major activities of the Group includemanufacturing, specialty food processing in a wide range of countries including Indonesia, Malaysia,Saudi Arabia and the United Kingdom, financing and banking. Qatar Islamic Bank (QIB) holds 3.5% ofthe issued share capital of TIIB. With total assets of YER307.1 billion (approximately USD1.5 billion), TIIBis Yemen’s largest bank.The principal business strategy of TIIB is to finance, invest and offer banking services in accordance withthe precepts of Islamic Shari’a. Services include commercial and investment banking as well asinvestment management. TIIB continues to look for a foreign strategic partner. Although the Bank is notreliant on finding one, a strategic investor would provide additional financial and operational support.TIIB has been impacted by the global credit crisis, but more specifically the downturn in regionalmarkets. Unlike other banks in Yemen, which are very much domestic focused (and hence relativelylittle impacted by the global credit crisis), TIIB has far more international asset exposure, particularly inmarkets such as the UAE and Saudi Arabia, including real estate and securities. This has placedpressure on asset quality over the last couple of years. However, TIIB’s domestic asset quality alsosuffered due to Yemeni government delays in payments to the Bank’s clients. As a result, nonperformingfinancing has risen substantially.However, despite the large rise in bad debt, TIIB maintained full coverage of non-performing facilitiesfollowing a large provision charge. This has, in turn, impacted the Bank’s profitability. Supporting TIIB’soverall financial profile is its acceptable capital adequacy. Liquidity has also improved, particularly throughto June 2009, as the Bank reduced its financing portfolio, while at the same time benefiting from a rise inunrestricted investment and savings accounts.