OREANDA-NEWS. Fitch Ratings has affirmed Wafa Gestion's National Asset Manager Rating at 'Highest Standards(mar)'. The Outlook is Stable.

KEY RATING DRIVERS

The rating reflects Wafa Gestion's leading position in the Moroccan asset management industry, and support from the retail banking network of its main shareholders, Attijariwafa Bank (AWB, BB+/Stable). It also reflects a well-staffed organisation, a robust operational platform and a satisfactory risk control framework.

Wafa Gestion's main challenge in the short term is to replace its Chief Investment Officer (CIO) who was promoted to Chief Executive in May 2016. In the medium term, another challenge for the company is to maintain its leading market share in the context of rising competition, notably in the institutional segment. A related challenge is to rejuvenate its product range, enhance retail distribution efficiencies and client interface (investor reporting and engagement technology).

Wafa Gestion 'Highest Standards(mar)' rating is based on the following category scores:

Company: Highest

Controls: High

Investments: Highest

Operations: Highest

Technology: Highest

Asset manager operations in the 'Highest Standards(mar)' category demonstrate an investment platform and operational framework that Fitch considers superior relative to the standard applied by domestic institutional investors.

Company

Wafa Gestion is the largest Moroccan asset manager in terms of assets under management (AUM) and has a diversified, albeit domestic, client and product mix. Distribution relies largely on the banking network of AWB, and to a lesser extent, Credit du Maroc. The company's staff is overall highly experienced, with a clear separation of duties. The company promoted the former CIO to CEO in May 2016 and now needs to appoint a new CIO.

Controls

The control framework, largely driven by the regulator (AMCC), is sound and facilitated by adequate automation in the company's core system, MANAR. Investment risk monitoring and reporting has been strengthened over the past 12 months (notably in pre-trade controls, best execution and broker selection). For controls to be scored at Highest, Fitch expects them to have demonstrated their effectiveness in the longer term and for risk management to be substantially integrated into the investment process. More generally, as local best practices evolve and new products are launched, the control framework must demonstrate its continued appropriateness to the risks involved.

Investments

The investment team is well-staffed and implements simple, well-designed processes in a disciplined manner. Investment processes are driven by internal fundamental research and are formalised in the form of successive committees to devise model portfolios. Evaluation of credit risk follows a rigorous process now formalised in exposure limits.

Operations

Operational, valuation and reconciliation procedures are efficient and adequately controlled, with MANAR. Major projects aiming at re-engineering database and reporting production as well as automating custodian interface have been completed over the past few months. The company has an investor website, which is being upgraded to allow trading.

Technology

IT development is outsourced to AWB with a service level agreement in place, while one dedicated full-time member of staff at Wafa Gestion, acts as a gateway between users and service providers. Wafa Gestion has completed a major upgrade of Manar and IT infrastructure over the past 12 months.

Incorporated in 1995, Wafa Gestion is the asset management arm of AttijariWafa Bank; the bank is the main shareholder of Wafa Gestion (66% of capital), with the remainder held by French asset manager, Amundi (A+/Stable/F1). Wafa Gestion employed 43 staff, including 11 portfolio managers at end-May 2016 and managed assets totalling MAD94bn (EUR8.6bn). Wafa Gestion invests almost solely in the local market and covers all asset classes although approximately 90% of AUM is concentrated in money market and bond products, in line with the local market.

RATING SENSITIVITIES

The rating may be sensitive to material adverse changes to any of the rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes and policies. A material adverse deviation from Fitch's guidelines for any key rating driver could cause the rating to be downgraded.