Capital Intelligence (CI), the international credit rating agency, announced (14 August 2014) that it has affirmed the ratings of Attijariwafa Bank (AWB), based in Casablanca, Morocco.
The Financial Strength Rating is affirmed at ‘BBB’, supported by AWB’s overall financial profile, including sound asset quality, despite the rise in non-performing loans (NPLs) in 2013, good loan-loss coverage, a slight improvement in capital and reasonable profitability together with its market leading position.
The rating is constrained by the increase in classified loans in 2013 and weaker profitability. The Outlook for the Financial Strength Rating (FSR) is ‘Stable’. AWB’s Long Term and Short-Term Foreign Currency Ratings are maintained at ‘BBB-’ and ‘A3’ respectively with a ‘Stable’ Outlook. AWB’s Foreign Currency Ratings are constrained by CI’s internal assessment of sovereign credit risk. The Support Rating is maintained at ‘2’, reflecting the strong ownership profile, together with the Bank’s dominant banking franchise and the very high likelihood of support from the authorities in case of need.
AWB is the leading bank in Morocco and possesses a strong domestic banking franchise with a market share of around one-quarter of sector assets, loans and deposits. It is considered to have very good management in place. AWB’s financial performance has been sound for some years. The Bank’s asset quality is adequate, but NPLs rose notably in 2013 on the back of a continued challenging operating environment, with some pressure within the corporate customer loan segment. Coverage also slipped, but remains sound.
The capital adequacy ratio (CAR) is reasonable, with increases over the last couple of years due to share allocation to employees, retained earnings, conversion of dividends to shares, and the issue of subordinated Tier 2 Capital. At end 2013, AWB met the new Central Bank requirement of 12% ratio for eligible capital to risk-weighted assets (RWAs).
Liquidity improved overall in 2013, with liquid assets – mainly Moroccan treasury bills – increasing further to a high level. The small growth in customer deposits exceeded the immaterial increase in loans. Market liquidity overall has tightened in the Moroccan banking sector over the last few years, impacted by both the downturn in the EU and a more challenging domestic economy. However, the Bank’s position is adequate and supported by its strong market share.
AWB’s profitability has been reasonable for some years, but performance in 2013 was slightly weaker. This reflected both very subdued loan asset growth and a squeeze on margins through lower interest on average earning assets. The Bank’s performance at the operating level remains adequate, and AWB has capacity to absorb any likely increased provisioning requirement. Performance at the consolidated level remained reasonable.
AWB was established in 1911 as Banque Commerciale du Maroc (BCM) and is Morocco’s oldest and largest domestic bank. The principal owners of AWB include the large National Investment Company (SNI) group (48.0%), domestic institutions (23.9%), Grupo Santander (5.3%) and staff (3.5%). About 14.4% is public float. AWB is the flagship bank of the Attijariwafa Bank Group which has extensive banking operations across Africa. The Group aims to develop community-based banking across North and sub-Sahara Africa. The Group has solid banking franchises in Tunisia (Attijari Bank Tunisia) and Senegal, and more recently in the Congo, Ivory Coast, Gabon, Mauritius and Cameroon.
The consolidated balance sheet amounted to MAD385,580mn (USD47.3 billion) at end 2013 with net profit of MAD5,066mn (USD621mn). AWB’s balance sheet stood at MAD292,350mn (USD35.9billion) at end 2013.