Fitch (UK) affirms Export Development Bank of Iran at 'B+'; Outlook Stable

The Long- and Short-term IDRs 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 EDBI could be limited, as indicated by the sovereign's Long-term foreign currency IDR of 'B+'. Any changes in the sovereign rating would have an impact on the bank's IDRs and Outlook.

EDBI's Individual rating reflects its leading position in financing Iran's non-oil exports, reasonable profitability and very strong capital ratios. However, its asset quality is relatively weak and the operating environment difficult. Total impaired loans amounted to a high 14.6% of gross loans in September 2007. Loan loss reserve coverage remained low at 41.3%, despite the new more stringent minimum specific reserve requirements imposed by the Central Bank of Iran (CBI) in May 2007. Loans are, however, typically secured and ultimate losses are limited, and the bank's capitalisation is very robust. The Fitch eligible capital ratio and the total regulatory capital ratio (under CBI guidelines) were 81.3% and 87.3%, respectively, in December 2007. This was due to funds of USD1.5bn provided by the Oil Stabilisation Fund and converted to equity in mid-2007.

At 20 December 2007, EDBI had equity of IRR19,625bn ($2.1bn) and total assets of IRR32,597bn ($3.5bn). 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 29 branches around the country, a representative office in Kazakhstan, and a branch in Venezuela.