Fitch Ratings today affirmed Bank Hapoalim (TASE: POLI) and Bank Leumi's (TASE: LUMI) long-term foreign currency Issuer Default Ratings (IDRs) at 'A-' with a Stable Outlook.
Fitch also affirmed the two Israeli banks' Individual Ratings at 'C', Short-term foreign currency IDRs at 'F2', Support Ratings at '1' and Support Rating Floors at 'A-'.
Fitch said that the affirmation of both banks' IDRs reflected its view of the support that would likely be provided to the banks, in case of need, by the Israeli authorities. The Individual Ratings reflect the banks' strong franchise in Israel, stable funding base and business mix, all of which support overall income generating ability through an economic cycle. Hapoalim's and Leumi's capitalisation are adequate and higher regulatory capital ratios were met through retained earnings and increasingly eligible hybrid instruments, the rating agency said.
"The Israeli economy has performed better than more developed markets through the global financial crisis. As a result, the asset quality indicators of Israeli banks are showing positive trends, although Fitch continues to have concerns with regards to transparency of impaired lending and over borrower and industry concentrations," says Zarema Lyanova, Associate Director in Fitch's Financial Institutions group. "The country's economic performance and the improvement in business volumes are likely to result in lower impairment charges and a recovery in operating profitability."
Fitch also affirmed First International Bank of Israel's (TASE: FTIN1;FTIN5) ratings at Long-term Issuer Default (IDR) 'BBB+' with a Stable Outlook, Short-term IDR 'F2', Individual 'C/D', Support '2' and Support Rating Floor of BBB+, but said it would no longer provide ratings or analytical coverage of the bank.
Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010