Yemen’s Tadhamon International Islamic Bank rating

Published March 16th, 2010 - 01:28 GMT
Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed
the 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 adjusted
to 4 from the previous level of 3. This downward adjustment reflects the more challenging domestic
and 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 is
affirmed 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 of
companies, Yemen’s largest private sector conglomerate. Major activities of the Group include
manufacturing, 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% of
the issued share capital of TIIB. With total assets of YER307.1 billion (approximately USD1.5 billion), TIIB
is Yemen’s largest bank.
The principal business strategy of TIIB is to finance, invest and offer banking services in accordance with
the precepts of Islamic Shari’a. Services include commercial and investment banking as well as
investment management. TIIB continues to look for a foreign strategic partner. Although the Bank is not
reliant 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 regional
markets. Unlike other banks in Yemen, which are very much domestic focused (and hence relatively
little impacted by the global credit crisis), TIIB has far more international asset exposure, particularly in
markets such as the UAE and Saudi Arabia, including real estate and securities. This has placed
pressure on asset quality over the last couple of years. However, TIIB’s domestic asset quality also
suffered due to Yemeni government delays in payments to the Bank’s clients. As a result, nonperforming
financing has risen substantially.
However, despite the large rise in bad debt, TIIB maintained full coverage of non-performing facilities
following a large provision charge. This has, in turn, impacted the Bank’s profitability. Supporting TIIB’s
overall financial profile is its acceptable capital adequacy. Liquidity has also improved, particularly through
to June 2009, as the Bank reduced its financing portfolio, while at the same time benefiting from a rise in
unrestricted investment and savings accounts.

© 2000 - 2019 Al Bawaba (

You may also like