Fitch (UK) affirms Bank of Industry and Mine at 'B+'; Outlook Stable

The Long- and Short-term IDRs are in line with the sovereign ratings of Iran ('B+'/Outlook Stable) and reflect potential support from the Iranian authorities. BIM is wholly-owned by the Iranian government and occupies a key role in promoting Iran's industrial and mining sectors, and the expansion 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 offer support could be limited, as indicated by Iran's Long-term foreign currency IDR of 'B+'. Any changes in the sovereign ratings would have an impact on the bank's IDRs and Outlook.

BIM's Individual rating reflects the bank's strong franchise in financing Iran's industrial and mining sectors, sound capital ratios and good cost efficiency. It also takes into account some concentrations on both sides of the balance sheet, relatively weak asset quality and low loan loss reserve coverage, though this is partly mitigated by the fact that most lending is secured by some form of tangible collateral.

Despite the difficult operating environment, BIM's balance sheet has been continuously expanding in recent years and banking operations have been a growing contributor to the bank's profitability. Profits were previously dominated by gains on the sale of its portfolio of Iranian companies, which have been gradually privatised. In September 2007, some $1.5bn provided by the Oil Stabilisation Fund (OSF) have been capitalised by the bank. As a result, the bank's equity almost doubled to around IRR20,722bn (approximately $2.2bn). This should provide further scope for growth for BIM's lending portfolio, which could lead to subsequent improvements in profitability.

BIM provides working capital facilities, trade finance, long-term finance, leasing, letters of credit and guarantees, as well as other commercial banking services, mainly to domestic clients in the industrial and mining sectors, but also, to a certain extent, to overseas clients, where this helps promote Iranian exports. The bank's head office is in Tehran and it has 42 branches around the country. Although BIM has an important development role, it is relatively small in the context of the Iranian banking system, with an approximately 1% market share of total assets at end-2007.