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Capital Intelligence affirms ratings on Banque Nationale Agricole.

Capital Intelligence (CI) has affirmed the Financial Strength Rating (FSR) of Banque Nationale Agricole (BNA), based in Tunis, Tunisia, at 'B'.

"The rating is constrained by very weak loan asset quality, insufficient coverage, and low levels of both liquidity and capital. BNA's Long-Term Foreign Currency Rating is affirmed at 'B+', while its Short-Term Foreign Currency Rating is maintained at 'B'. Both ratings are also constrained by the weak financial profile of the Bank, but are supported by majority government ownership. The Outlook for all ratings is 'Stable'. The Support Rating is maintained at '3'. CI believes that there is a high probability that BNA would be supported in extremis, as it is government-owned and holds a large market share.

"BNA, majority owned by the Tunisian government, is one of the largest banks in Tunisia and controls an important banking franchise in the domestic market with around fourteen per cent of market assets. BNA's financial profile is very weak, reflecting poor loan asset quality and associated insufficient loan-loss coverage, as well as very low liquidity and capital. Non-performing loans (NPLs) increased further in 2013, a factor of both the weak economy and more stringent loan classification. There remain significant challenges to the Tunisian economy, and this will continue to exert pressure on the Bank's asset quality. Weak asset quality has led to low profitability due to the carry cost of NPLs and the continued high provisioning charge, which absorbs a large proportion of low operating profit. Capital needs to be raised, but this will not occur before the detailed financial and strategic audit on BNA (and the other two Tunisian state banks) is completed and a decision on these banks is taken. Liquidity is tight due to the fact that loans form a high percentage of total assets, and the liquid assets base is small. Moreover, the customer deposits market in Tunisia has been weak over the past few years with banks relying on the Central Bank of Tunisia for additional liquidity. However, the position improved slightly in 2013."

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Publication:CPI Financial
Geographic Code:6TUNI
Date:Nov 20, 2014
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