Bank of Alexandria ratings raised

Capital Intelligence, the international credit rating agency, has raised the Financial Strength Rating of Bank of Alexandria (BoA) to BB+ from BB, as well as its foreign currency long-term and short-term ratings to BBB- from BB+, and A3 from B, respectively. The outlook for all the ratings is ‘stable’. The bank’s foreign currency ratings, which are constrained by Egypt’s sovereign ratings, reflect its strong ownership and a high likelihood of financial support from its Italian parent, Intesa Sanpaolo.
The ratings upgrade reflects the bank’s improving asset quality and strong loan-loss coverage, its retail customer deposit funding strength and the better outlook for profitability despite lower net interim profits in Q32009. The major rating constraints are still low non-interest income, weaker capital adequacy at end 2008, as well as the higher risk associated with its growing retail loan book, although this contributes to diversifying credit risks and income streams.
Bank of Alexandria is majority owned (70.25%) by Intesa Sanpaolo which also provides management and technological support; other shareholders include the Egyptian government (20%) and the International Finance Corporation (World Bank Group, 9.75%).
Since its privatisation three years ago, Bank of Alexandria has strengthened risk management systems and transformed its corporate profile. It has begun implementing a core business strategy focused on retail banking, which has enabled it to maintain good growth in loans and build up its customer deposit base.