West Africa Rating Agency (WARA) announces the publication, on December 3, 2018, of the first rating of the Bank of Habitat of Senegal (BHS). On its regional scale, WARA assigns BHS the long-term rating of « BBB » in investment grade, while its short-term rating is « w-4 ». The perspective attached to these ratings is stable.
At the same time, on its international scale, WARA assigns to BHS the following ratings and perspectives: iB / Stable / iw-6.
BHS was created in 1979 by the State of Senegal to finance the real estate sector in general, and social housing in particular. Today, BHS is the leader in setting up real estate loans with a 70% market share. At the same time, taking advantage of the liberalization of banking activity in Senegal, BHS undertook an evolution of its business model in order to eventually become a universal bank.
The rating thus granted to BHS reflects: i) its strategic positioning in the financing of the real estate sector in Senegal; (ii) its technical expertise in setting up appropriate financing mechanisms; (iii) sound governance and a competent management team; (iv) a strong intermediation margin thanks to a very competitive refinancing cost; v) the importance of its public interest mission through the financing of social housing.
In contrast, the BHS rating is constrained by: i) the small size of its network; (ii) a limited commercial offer and improved communication on its range of products and services; (iii) increased operating costs and a significant cost of risk; (iv) a deterioration in liquidity ratios.
The long-term local currency counterparty rating of BHS (BBB) has two external support notches. In fact, BHS can benefit up to 3 notches of external support. WARA nevertheless decides to grant 2 external support notches because of the minority shareholding (17.74%) of the State of Senegal in the capital of BHS.
External support is of a systemic nature, considering that BHS is considered by WARA as a bank with a mission of general interest, public service and economic policy, namely the financing of real estate at national level and social housing in particular.
In this, the systemic importance of BHS is high, while the support propensity of the Senegalese state (ie its ability and willingness to support banks likely to encounter difficulties) is considered by WARA as average.