Fitch Ratings on May 23 lowered Arab Tunisian Bank's viability rating to "b-" from "b".

The downgrade reflects the lender's recent weak performance and asset quality deterioration as a result of a tough environment in Tunisia, where it exclusively operates. Arab Tunisian Bank's impaired loans/gross loans ratio stood at 14% at the end of 2018, in line with the sector average. However, its increasing pile of impaired loans, along with its significant exposure to unquoted equities which also result in impairment charges, remain a concern especially considering that its capital buffers are on the low side, the agency noted.

Concurrently, the agency affirmed Arab Tunisian Bank's long- and short-term foreign- and local-currency issuer default ratings at BB-/B and support rating at 3. The outlook is negative on the long-term ratings. Its national long- and short-term ratings were also affirmed at AA+(tun)/F1+(tun), with a stable outlook on the long-term rating.