Fitch IBCA mentioned in its announcement that "Akbank's ratings reflect its important position within the Turkish banking system, a strong franchise and brand name, sound performance record, stable funding and very strong capital base. They also take into account the risks associated with a challenging and potentially volatile operating environment. Akbank has undeniable liability strengths that should leave it well placed to face the challenges of an increasingly competitive operating environment. It enjoys a large and stable customer deposit base and is one of the strongest capitalised Turkish banks".
The announcement of Fitch IBCA is enclosed below:
Fitch-London-20 July 2000: Fitch, the international rating agency, has assigned a foreign currency Long-term rating of 'BB-' (double B minus) to Akbank T.A.S. (Akbank). In April 2000, Fitch upgraded the Republic of Turkey's Long-term foreign currency rating from 'B+' to 'BB-' (see website, www.fitchibca.com) and this acts as the country ceiling for all issuers domiciled in Turkey. The agency has also assigned Akbank Individual and Short-term ratings of 'B/C' and 'B' respectively, together with a National rating of 'AA+ (tur)'. Akbank's local currency Long-term rating of 'BB' (constrained by the Agency's rating for local currency obligations of the Republic of Turkey) and Support rating of '2T' are affirmed.
Akbank is the fifth largest Turkish bank and the third largest private bank, in terms of total assets. It was incorporated in 1948 and is part of one of Turkey's largest and strongest industrial conglomerates, the Sabancı Group. The majority of its shares (74.5%) are held by the group (Haci Omer Sabancı Holding AS and other group companies) and the Sabancı family. Akbank's main activities include retail, corporate and international banking, and it also provides investment services, securities brokerage and insurance through subsidiaries and affiliates. Between 1995 and 1998, Akbank has divested non-core investments and now holds only stakes in financial services companies.
Akbank's ratings reflect its important position within the Turkish banking system, a strong franchise and brand name, sound performance record, stable funding and very strong capital base. They also take into account the risks associated with a challenging and potentially volatile operating environment. In recent years, AKB has been pursuing a strategy aimed at long-term growth, and has invested heavily in IT, restructured its branch network and broadened both its product range and distribution channels. Despite the contraction in the economy in 1998/1999, Akbank's asset quality remains good, with reported impaired loans fully covered by loan loss reserves. Its government securities portfolio increased in 1999 as management reduced the loan portfolio in real terms in an uncertain environment. Akbank's performance ratios have compared favourably with its peers', but weakened in 1999, mainly because of the impact of exceptional items in 1998 and 1999 and the use of the USD as the reporting currency as a proxy f
or adjusting for inflation. Profitability for the sector will come under increasing pressure in coming years in a progressively lower inflation and interest rate environment. In recognition, Akbank is focusing on increasing non-interest revenue streams and maintaining tight cost control. The former will benefit from a gradual build up of businesses which have yet to achieve critical mass, and the latter is benefiting from prior investment in IT and infrastructure that has created a highly efficient operation. Akbank's net open foreign exchange position was well within regulatory limits and lower than its peers'. Akbank has undeniable liability strengths that should leave it well placed to face the challenges of an increasingly competitive operating environment. It enjoys a large and stable customer deposit base and is one of the strongest capitalised Turkish banks.
Fitch's Support rating reflects its opinion that, whilst Akbank's primary source of potential support, if it were to run into difficulties, would come from the Sabancı Group, given Akbank's importance to the local economy, it would ultimately be supported by the Turkish authorities. The 'T' suffix reflects Turkey's sub-investment grade sovereign rating and the possibility of transfer risk arising.
Contact: Gordon Scott, London Tel: +44 (0)20 7417 4222
Notes: Fitch IBCA's Support and Individual Ratings for Banks
Fitch IBCA's Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it.
Fitch IBCA's national ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign's international rating is below 'AAA'. National ratings are not internationally comparable since each sovereign is 'AAA' and other credits are rated only relative to the sovereign. They are signified by the addition of an identifier for the country concerned, such as 'AAA(tur)' for national ratings in Turkey.