2022 was a good year for AttijariWafa Bank’s Tunisian subsidiary despite the hostile environment. The bank’s operation has managed to stay the course in 2022 in terms of loans’ growth. Earnings have also registered a decent growth pace (+18% year on year at 196.3 million Tnd) thanks to the strict code of conduct when it comes to risk management. Things can start to turn relatively sour in 2023 as we expect the business environment to get worse and collateral damage in terms of bad loans and cost of risk to rise. With investments down and delinquency risk getting higher, the bank will most likely need to slowdown both in terms of loans’ growth and earnings. We expect the liquidity crunch to continue to put more pressure on the lending activity as a whole in 2023 although Attijari’s solid financials would, in this instance, play a key role to keep the bank at bay from the liquidity risk.
Attijari’s share price did not follow the good news on the bank’s top line and bottom-line growth, not even the news that the bank is preparing to raise its dividend for 2022 payable soon in 2023. Attijari is raising its dividend in full compliance with the central bank’s circular 2023-10 dated March 7th, 2023. The provisions of the new circular allow banks to raise their dividend level only if they comply with a certain level of capital adequacy. Given Attijari’s large shareholders’ equity, the bank was in good position to announce a generous dividend at 4Dinars per share, a hefty payout ratio that stands at 87.6%
As for the outlook, we expect the bank to stay stronger than its peers. We can tell from its recent disclosure of the first quarter 2023 indicators. Its net banking income as of March 31st, 2023, has already posted a 16.8% growth at 159.7million Tnd. Its deposits have also registered a decent growth at 5.2% at 9.1 billion Tnd. Loans’ growth up 4.4% at 6.5 billion Tnd outstanding. Our forecasts on the full year 2023 are based on a 14.7% growth of the Net banking income at 659.7 million Tnd. We also forecast a 9% growth in deposits on the full year at 7 billion Tnd and Net profit up 15.6% to reach 215.1 million Tnd and even higher when we look at the net profit ex-minorities (226 million Tnd)
In the stock market Attijai’s share price has leapt 16.1% year to date which means a P/E ratio forward at 7.7x and a price to book value at 1.7% at the close of 2022. We believe that the potential for more growth in the share price are realistic this year (2023) given the bank’s solid performance and solid fundamentals. The bank’s Loans to Deposits ratio is low enough to enable more growth in the lending activity even if the liquidity crunch continues for the rest of the year. Attijari stock is one of the most traded stocks by foreign institutional investors and one of the most liquid stocks in the stock exchange.
We keep our rating unchanged on the stock “BUY”
Question? Please write up to bhamza@tunisievaleurs.com
By Hamza Ben Taarit senior analyst covering the stock and the banking sector.