Ratings of Tunisia’s Banque Nationale Agricole

Published March 18th, 2010 - 12:42 GMT
Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed
the Foreign Currency ratings of Tunisia’s Banque Nationale Agricole (BNA) at BB+ (Long-term) and A3
(Short-term), and the Financial Strength rating at B+. The Support rating was maintained at 2. Due to
BNA’s improved asset quality and capital position, the Outlook was raised to Positive from Stable for
the Financial Strength rating.
BNA can trace its history to 1959, the founding date of one of the two banks specialised in agricultural
financing and involved in the 1990 merger creating BNA. The Republic of Tunisia and quasigovernment
institutions own 65% of the Bank, whose primary mission is to support the government’s
economic and social development policies. The government retains full management control. The
Tunisian government views BNA as a strategic asset and a further dilution of its stake is not on the
agenda.
BNA still faces a number of challenges in enhancing its financial profile. These largely centre on a high
level of non-performing loans (NPLs) and low provisioning. However, BNA’s asset quality has shown
consistent improvement over the last few years, particularly an increase in the Bank’s loan-loss reserve
coverage against NPLs and a fall in the gross level of NPLs. Weak asset quality has led to low
profitability as there is a need for continued high provisioning.
In regards to profitability, the Bank recorded improvement to end-June 2009. The provision charge
continues to consume a significant proportion of operating profit; this is likely to remain the situation
over the next few years. Liquidity is somewhat tight, mainly due to the fact that loans form a high
percentage of total assets. Capital adequacy is adequate but only just so as the position is eroded by
the shortfall in provisions. Nonetheless, the Bank raised Tier 2 capital through a subordinated issue in
H1 2009 and this will support the balance sheet at least over the short term. Further improvement in
provisioning coverage, a lower level of NPLs and higher profitability are likely to result in a higher
financial strength rating going forward.
With assets of USD4,023mn (TND5,436mn) at end-June 2009, BNA is the second largest bank in the
Tunisian banking sector, controlling around 15% of banking system assets.

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