Fitch confirms Andbank rating at BBB

Escaldes Engordany, 13 April 2021.

Fitch Ratings has confirmed Andbank’s long-term credit rating at BBB, making it the Andorran bank with the best Fitch rating for the second consecutive year.

In addition to highlighting the bank’s considerable international presence in the private banking business and its business scale – larger than that of its competitors – the agency’s report underlines solid operating profits, asset quality, the protection offered by the strong impaired loan reserve coverage, the guarantees on loans and its satisfactory capitalisation.

The Andbank Group, which celebrates its 90th anniversary this year, showed a profit of €29.5 million last year, up 5% on the previous year. The positive business performance in the countries in which it operates, the signing of corporate operations and the expansion of its private banking centre network were the main reasons why the bank increased its assets under management by 6% to 25.303 billion euros.

The agency stressed that Andbank’s profitability showed signs of strength in 2020 and benefitted from fee revenues through the private banking business, which is a stable and recurring source of income. Fitch believes that Andbank is well positioned to take advantage of its larger scale and growing international volumes of assets under management.

Andbank was one of the most dynamic and active players in the private banking industry throughout 2020. Its international growth strategy initiated in 2008 has been one of the keys to its success. Andbank currently has a presence in 12 countries and the international area accounted for 84% of total assets under management at the end of 2020.

Asset quality, solvency and capital

With regard to asset quality assessment, the report refers to the problem asset ratio, which fell to 4.1% at the end of 2020, compared to 4.3% at the end of 2019.

The agency considers Andbank’s capital ratios satisfactory for the bank’s risk profile. The bank ended 2020 with a Basel III regulatory capital ratio (CET1 ratio) of 13.6% and the agency considers that the capitalisation derived from non-provisioned problem assets is manageable (13% of CET1 capital) and mitigates the risks related to its equity base and loan portfolio.

It also highlights the strong coverage and the degree of collateralisation in problem assets, thus underlining the protection offered by Andbank given its “high provisions to cover impaired loans and guarantees on loans”.

In this regard, the firm considers that Andbank has a large and stable deposit base that enables it to fully fund its loan portfolio.

At the end of 2020, Andbank’s TIER1 solvency ratio stood at 16.02% at a consolidated level and 27.91% in Andorra. The LCR remained above the minimum liquidity coverage ratio of 100% at 190.26%.