Capital Intelligence (CI), the international credit rating agency, today announced that it has assigned an initial Financial Strength rating of BB to Turkey's Albaraka Türk Katilim Bankasi A.Ş. (ATKB). In addition, initial Foreign Currency ratings of BB long-term and B short-term are assigned to the Bank. In view of the Bank's ownership and a reasonable expectation of support from its majority shareholder, an initial Support rating of 3 is assigned. The Outlook for all ratings is stable.
ATKB is the smallest of Turkey's four participation banks, which operate on the basis of interest-free
principles. It ranks twenty-first by total assets of Turkey's 49 banks, with total assets of TRY6.4 billion
(USD equivalent 4.3 billion).
The Bank was founded in 1984 as what was then known as a Special Finance House, and adopted its
current style following the passage of the Banking Law of 2005. A majority (54%) of the shares is held by
the AlBaraka Banking Group (ABG) of Bahrain, which engages in Islamic banking and operates Shari'a compliant banks in a number of countries, including Bahrain, Algeria, Egypt, Indonesia, Jordan, Lebanon, Pakistan, South Africa, Syria, Sudan and Tunisia. The parent is regulated by the Central Bank of Bahrain and its shares are listed on the Bahrain stock exchange as well as on Nasdaq Dubai.
For the year 2009 ABG reported total assets of USD13.2 billion and equity of USD1.7 billion. Net profit
for the year was USD167mn. Of the remaining 46%, 22% is publicly held and traded on the Istanbul
Stock Exchange. Twenty-four per cent is held by other local and foreign investors.
The ratings are underpinned by the Bank's sound asset quality and strong operating profitability.
Although NPLs have grown sharply in the past two years, ATKB has consistently maintained high
coverage by loan-loss reserves. In 2009 the Bank sacrificed its net profit and ROAA to make the
provisions necessary so that coverage would be more than full. ATKB has a strong ability to attract
customer deposits, with robust growth in demand deposits but especially in investment deposits.
However, the even greater expansion of the loan portfolio has stretched the Bank's liquidity ratios
considerably, even more than the other three participation banks. Capital adequacy by most measures
is satisfactory.
Operating profitability is strong by most standards, although about average by comparison with the
Turkish banking system as a whole. That profitability is marked by two fundamental strengths high
levels of fee and commission income and a good cost structure. As noted above, ROAA suffered in
2009 because of the Bank's decision to maintain its asset quality.
Banking activities are conducted exclusively within Turkey. The Bank operates a 101-branch domestic
network and provides brokerage services as an agency of Bizim Menkul Değerler A.Ş., the Bank's
brokerage subsidiary. At year-end 2009 ATKB employed a total staff of 1,935 (2008: 1,796).
and www.ciratings.com (Nov 23, 2010)
