p align=”Justify”>Johannesburg, 02 Oct 2013 — Global Credit Ratings has today affirmed the long term national scale and affirmed the short term national scale issuer ratings assigned to PTA Bank of AA+(KE) and A1+(KE) respectively; with the outlook accorded as Stable. Furthermore, Global Credit Ratings has affirmed the international scale rating assigned to PTA Bank of BB+ ; with the outlook accorded as Stable. The rating(s) are valid until 9/2014.
Global Credit Ratings has accorded the above credit rating(s) on PTA Bank based on the following key criteria:
The Eastern and Southern African Trade and Development Bank (“PTA Bank” or “the Bank”) is a supranational development finance institution established in 1985. The main mission of the Bank is to act as a vehicle contributing towards the socio-economic development of its member states through promoting intra- trade and the economic integration of the sub-region. The Bank achieves its mandate by financing trade related activities among member states via two products, project and trade finance loans, for both public and private sector projects. Alongside 18 African governments, the Bank’s membership also includes China from outside the region. The African Development Bank (“AfDB”) is the only institutional shareholder with a 5.23% stake as at FYE12.
The Bank is well capitalised, with primary capital (paid up capital and reserves) increasing by 23.7% to US$344m as at FYE12 due to capital contributions from existing members (US$14.7m) and retained income (US$51.2m). A risk weighted capital adequacy ratio of 35% was reported as at FYE12 (FYE11: 37%), calculated in line with Basel II requirements (internal minimum 30%). Financial flexibility is further bolstered by the Bank’s access to substantial callable capital (US$1bn) which provides a significant degree of support. The callable capital acts as a guarantee to the Bank’s borrowings. Gross non-performing loans (“NPLs”) grew by 37.7% to around US$71.6m as at FYE12, representing 5.2% of gross advances, up from 4.6% as at FYE11. Arrears coverage (specific provisions) decreased slightly to 67% as at FYE12 (FYE11: 70%). Net NPLs remained negligible as a percentage of capital at 6.8%, as at FYE12 (FYE11: 5.7%). PTA Bank reported a strong performance in F12, with net profit increasing 50% to US$51m, supported by loan disbursements, controlled costs and higher margins, notwithstanding a rise in impairment charges. Overall, key profitability indicators i.e. the ROaE and ROaA ratios increased to 16.3% and 3.2% from 12.3% and 2.5% respectively in F12. The international foreign currency rating is underpinned by the diversified shareholding, which ameliorates sovereign interference risk. However, the rating was constrained by the low sovereign ratings of countries in which PTA Bank extends loans. The majority of cash and liquid assets are US Dollar denominated and placed with reputable counter-parties with high international ratings. Additionally, asset/liability maturities are generally matched.
Future developments that could lead to an upgrade include, a positive earnings trend while maintaining credit protection factors and a further strengthening of the equity base. A further weakening of asset quality indicators exacerbated by deteriorating economic, regulatory and political environments across member countries and the spill over effects of a weak global market could exert downward pressure on the ratings.
|NATIONAL SCALE RATINGS HISTORY||INTERNATIONAL SCALE RATINGS HISTORY|
|Initial rating (Nov/2004)||Initial rating (Nov/2004)|
|Long term: AA(KE); Short term: A1(KE)||Long term: BB|
|Outlook: Stable||Outlook: Stable|
|Last rating (Sep/2012)||Last rating (Sep/2012)|
|Long term: AA+(KE); Short term: A1+(KE)||Long term: BB+|
|Outlook: Stable||Outlook: Stable|
|+27 11 784 1771|
|Sector Head: Financial Institution Ratings|
|+27 11 784 1771|
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
PTA Bank participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to PTA Bank with no contestation of the rating.
The information received from PTA Bank and other reliable third parties to accord the credit rating included the latest available audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, most recent year to date management accounts, corporate governance and enterprise risk framework, reserving methodologies, capital management policy, Industry comparative data and regulatory framework and a breakdown of facilities available and related counterparties.