Fitch Ratings has assigned Turkey's Asya Finans Long-term foreign and local currency ratings of B-. Additionally, the agency has assigned Short-term foreign and local currency ratings of B, an Individual rating of D/E, a Long-term National rating of BBB, and a Support rating of 5. The Outlook on all Long-term ratings is Stable.
The ratings reflect the company's improved profitability and diversified funding. This is, however, offset by weak asset quality and a growth strategy that could have an adverse impact on capital.
Asya Finans is a special finance house, which does not pay or receive interest on its activities. Loans include production support, individual financing, profit/loss sharing, leasing, and trading documents against goods. The company funds its activities through equity, current accounts, and profit sharing accounts. Under the latter, investors agree to a predetermined profit or loss on the investment.
After posting a loss in 2001, Asya Finans recorded net income of 8.6 trillion Turkish lira ($6.3 million) in 2002, benefiting from improved funding revenues and non-interest income. The company continues to have a high-cost structure. The credit portfolio increased 77 percent last year and there are some concentrations in the textile and leasing sectors.
Non-performing assets improved to 9.50 percent of related assets due to growth but remain high. Reserve coverage increased to 51 percent from 35 percent. Asya Finans' funding is mostly short-term and denominated in foreign currency. During the 2001 economic crisis, the company suffered a deposit outflow and, in order to instill confidence, the directors infused new deposits.
Asya Finans had a regulatory capital ratio of 11.40 percent at end-2002. In light of the company's planned growth strategy, further capital may be warranted.
Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. National ratings are designed for use mainly by local investors in local markets. Specific letter grades are not therefore internationally comparable. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
