The Issuer Default and Short-term ratings are in line with the sovereign ratings of Iran and reflect potential support from the Iranian authorities. EDBI is wholly-owned by the Iranian government and occupies a key role in promoting Iran's non-oil exports and diversification of the Iranian economy. As such, it is likely that the bank would be supported by the Iranian government in case of need. However, the ability of the Iranian authorities to support could be limited, as indicated by the sovereign foreign currency Issuer Default rating of 'B+'. Any changes in the sovereign rating would have an impact on the bank's Issuer Default and Short-term ratings and Outlook.
Its Individual rating reflects EDBI's leading
position in financing Iran's non-oil exports, reasonable profitability and sound
capital ratios. However, its asset quality is relatively weak and the operating
environment difficult. Total impaired loans increased to 11.3% of gross loans in
March 2006 (March 2005: 8.2%) with loan loss reserve coverage at a low 40.3%,
even though the Central Bank of Iran (CBI) introduced minimum specific reserve
requirements in 2005-06. Loans are, however, typically secured and ultimate
losses are limited. Tier 1 and total capital ratios, as per CBI guidelines,
remained sound, despite a declining trend, at 20.9% and 25% respectively in
March 2006. However, part of the funding to be provided by the Oil Stabilisation
Fund (up to USD1.5bn) is expected to be converted to equity.
At 20 March 2006 EDBI had equity of IRR4,051bn (USD443m) and total assets of IRR14,402bn (USD1.58bn). It provides working capital, buyer's and supplier's credit, project finance, letters of credit and guarantees, as well as other commercial banking services. It also works closely with the Export Guarantee Fund of Iran, which provides credit insurance. The bank's head office is in Tehran; it has 28 branches around the country and a representative office in Kazakhstan, and has obtained a licence to establish a subsidiary in Venezuela.
... Payvand News - 2/15/07 ... --