Ratings agency, Fitch, has affirmed Bank of Africa's (BOA) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB' with Stable Outlooks.
Fitch also affirmed BOA's Viability Rating (VR) at 'bb-' and National Long-Term Rating at 'AA-(mar)' with a Stable Outlook.
According to Fitch, BOA's IDRs are driven by potential support from the Moroccan authorities, as reflected in the bank's Government Support Rating (GSR) of 'bb'.
The Stable Outlook mirrors that of the sovereign rating. BOA's VR considers its solid franchise in Morocco and its pan-African presence, which brings diversification benefits to the business model but also exposes it to less developed markets and more volatile operating conditions. BOA's stronger performance and fairly strong funding and liquidity are balanced by weak capital and asset quality.
Government Support Rating:
BOA's GSR of 'bb' considers the bank's systemic importance as the third-largest Moroccan bank - but also the limitations of the sovereign's financial flexibility.
Fitch therefore views BOA as a domestic systemically important bank (D-SIB) in Morocco based on its 14% market share of loans and deposits.
Moderate Risk Profile
Fitch said BOA’srisk profile has improved with a greater harmonisation in risk controls across the group, a cautious approach to growth in recent years in a drive to preserve capital, as well as several rounds of capital increases, including rights issues.
The bank's loan book is less concentrated than the peer average; the largest 20 exposures were 14.5% of total gross loans end-half-year 2023.
Asset-Quality Weaknesses
Fitch again said BOA's Stage 3 loans ratio (end-1H23: 9.9%) is higher than at other major Moroccan banks, which is partially driven by higher impairments at its African subsidiaries.
Stage 2 loans are high at 8.1% of gross loans, although roughly in line with the peer average of 9%. Reserve coverage of Stage 3 loans by total allowances (85%) is reasonable.
Healthy Profitability
Again,BOA's operating profit improved to 2.0% of risk-weighted assets (RWAs) in first-half of 2023 (2022: 1.6%) owing to strong fees and commissions income as well as net interest income, and is broadly in line with the sector average. BOA's cost efficiency has improved but remains weaker than peers' primarily due to its foreign operations. In 9M23, net income was up 17% year-o-year, primarily due to a solid 18% growth in net fees and commissions and 10% growth in net interest income
Latest Stories
-
Kwesi Atuahene: Ghana’s health capital depends on HealthTech – Africa Center for Digital Transformation
6 mins -
13 signs your wife is planning on leaving you and you have no idea
11 mins -
If I speak there will be fire – Salah on Klopp row
1 hour -
Grieving after divorce is normal, but this particular kind of grief isn’t
1 hour -
10 beautifully unexpected ways husbands proposed to their wives
1 hour -
Reality zone with Vicky Wireko: Painting Ghana purple: Be aware, May is month of mental health awareness
1 hour -
Prof Opoku-Agyemang’s integrity is admirable – Inusah Fuseini
2 hours -
Your reign has been a beacon of wisdom – Alan Kyerematen tells Asantehene
2 hours -
Akufo-Addo’s driver wins La Dadekotopon NPP primary
2 hours -
Education Minister must channel resources to rebrand basic public schools into tackling critical needs – Minority
2 hours -
CAFCC: “Dreams need to score early to unsettle Zamalek” – Former Zamalek striker Felix Aboagye
3 hours -
GHS launches mobile app to counter misinformation about vaccines
3 hours -
Election 2024: Care Ghana warns EC of recruiting political actors as Returning Officers
4 hours -
Mohammed Kudus gets 5th Premier League assist as West Ham hold Liverpool
4 hours -
Religious support source of my success – Asantehene
4 hours