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Fitch Affirms Credit Immobilier et Hotelier at 'BB+'; Outlook Stable
July 5, 2017 / 1:18 PM / 5 months ago

Fitch Affirms Credit Immobilier et Hotelier at 'BB+'; Outlook Stable

(The following statement was released by the rating agency) LONDON, July 05 (Fitch) Fitch Ratings has affirmed Credit Immobilier et Hotelier (CIH) Long- and Short-term Issuer Default Ratings (IDR), respectively at 'BB+' and 'B'. Fitch has also affirmed CIH's Viability Rating (VR) at 'bb-', National Long-Term and Short-Term Ratings, respectively of 'AA-(mar)' and 'F1+(mar)' and Support Rating at '3'. The Outlooks on the Long-Term ratings are Stable. A full list of rating actions is at the end of this rating action commentary. The IDRs and National Ratings are driven by potential support from CIH's majority shareholder, Caisse de Depot et Gestion (CDG). The VR, which measures the bank's standalone financial strength, indicates CIH's vulnerability to adverse changes in business or economic conditions but also the bank's moderate financial strength. KEY RATING DRIVERS IDRS, NATIONAL RATINGS AND SUPPORT RATING The bank's IDRs, National Ratings and Support Rating reflect potential support from CDG, which controls 65.9% of the bank. CDG, a public sector establishment, is Morocco's leading institutional investor and a driver for development and change in the country's financial sector and capital markets. CDG is represented on CIH's board and key committees and is closely involved with the bank's strategic decisions and oversight. According to Moroccan law, public sector entities are not allowed to fail or be liquidated. In our view, the Moroccan state's propensity to support CDG in case of need is very high, as is CDG's propensity to support CIH if required. However, the overall probability of support for CIH from CDG is moderate and this is reflected in the bank's Support Rating. The Stable Outlook reflects that on Morocco's sovereign ratings. VR The VR reflects CIH's moderate franchise and concentrations in both real estate development and the retail mortgage market. It also factors in some weaknesses in asset quality, asset and liability maturity mismatches, which expose the bank to high interest rate risk, and expansion plans that will likely result in an erosion of capital adequacy ratios. The bank's experienced management team, sound knowledge of Morocco's real estate markets and good execution skills, combined with the bank's acceptable risk controls, are positive factors for the VR. CIH's share of banking sector assets is below 5%. However, its share of retail mortgages and real estate development loans is nearly 10%, reflecting the bank's origins as a specialist financier of Morocco's key tourism and real estate sectors. CIH plans to reduce its dependence on the real estate sector, but, in our view, this will take time. Impaired loans represent around 7% of CIH's gross loans, in line with the average for the sector's domestic, entirely Moroccan-based, loan portfolios. Stable deposits provide 50% of funding and the bank's access to domestic capital markets is good. Performance indicators are in line with the sector average. RATING SENSITIVITIES IDRS, NATIONAL RATINGS AND SUPPORT RATING The bank's IDRs, National Ratings and Support Rating are sensitive to a change in our assumptions around CDG's propensity and ability to support CIH. This would most likely be triggered by a change in Morocco's sovereign rating. This is unlikely to happen in the near term, as indicated by the Stable Outlook on Morocco's rating. VR CIH shares other Moroccan banks' certain weaknesses, which constrain their VRs at somewhat low levels. We do not expect to see significant revenue diversification at CIH in the near term, nor do we expect to see a material reduction in concentration risk, impaired loans, or structural interest rate risk. Upside for CIH's VR is therefore currently limited. As the bank further builds up its presence in the consumer finance segment, expands its corporate lending business and continues to grow, this could lead to a modest upgrade of the VR over time, provided capital ratios are maintained. The rating actions are as follows: Long-Term Foreign and Local Currency IDR affirmed at 'BB+'; Outlook Stable Short-Term Foreign and Local Currency IDR affirmed at 'B' Viability Rating affirmed at 'bb-' Support Rating affirmed at '3' National Long-Term Rating affirmed at 'AA-(mar)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(mar)' Contact: Primary Analyst Janine Dow Senior Director +44 20 3530 1464 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Nicolas Charreyron Analyst +971 4 424 1208 Committee Chairperson Alexander Danilov Senior Director +7 495 956 24 08 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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