Fitch Confirms Arab Banking Corporation Tunisie is ‘AA+(tun)’; Stable outlook
Fitch Ratings confirmed
Main rating factors
The stable long-term domestic rating outlook reflects our assessment that the upside and downside risks to ABC Tunisia are equally balanced relative to other Tunisian issuers.
Shareholder support: ABC Tunisia represents less than 1% of
Very Harsh Operating Environment:
Heightened risk profile: As a purely domestic bank, ABC Tunisia’s risk profile is inevitably high given the very challenging domestic operating environment. However, credit risk is well managed and the bank has consistently reported impaired loan ratios below the industry average in recent years. The public sector concentration in the loan portfolio is high, which weighs on our assessment of ABC Tunisia’s overall risk profile.
Quality of Vulnerable Assets: ABC Tunisia’s impaired loan ratio of 4.5% at end-2021 compares well to the industry average (around 13%). However, rapid loan growth in recent years and a degraded operating environment will put pressure on asset quality. Concentrations of unique names are high; its 20 largest exposures represent 76% of gross loans at the end of 2021 (9.1x equity), which makes the bank highly exposed to event risk.
Modest performance: ABC Tunisia’s profitability is volatile and quite low, with a return on average equity (ROAE) generally below 6%. The bank posted a small loss in 2021 due to higher loan impairment charges; the latter can vary greatly from one year to the next, due to the difficult operating environment and regulatory changes. Profitability is just acceptable with a cost/income ratio of 77% in 2021.
Limited capital buffers: ABC Tunisia’s capital ratios are well above regulatory requirements in
stable funding; High liquidity: the bank has access to group funding and deposits come from
Factors that could, individually or collectively, lead to a negative rating action/downgrade:
A downgrade would require a downgrade of several notches of
A downgrade of
Factors that could, individually or collectively, lead to positive rating action/improvement:
Opportunities to improve national rankings, which are already high, are limited.
REFERENCES FOR A MOSTLY MATERIAL SOURCE CITED AS A KEY SCORING FACTOR
The main sources of information used in the analysis are described in the applicable criteria.
Public ratings with credit link to other ratings
N / A
Entity / Debt
Arab Banking Corporation Tunisia
SEE ADDITIONAL ASSESSMENT DETAILS
Additional information is available at www.fitchratings.com