Harare — Global credit rating agency Duff &Phelps has upgraded the long- term domestic rating of Zimbabwean accepting house Trust Merchant Bank to become the second local financial institution to have its rating reviewed this year by the US-based firm.

The international rating agency, which has its regional offices in South Africa, this week announced it was upgrading the long-term domestic rating of Trust Merchant Bank to BBB+ from BBB, a rating that defined the local financial institution as an organisation with adequate protection factors.

It also reaffirmed Trust Merchant Bank's short-term rating of D-2, which indicates a good certainty of timely repayment in the short term with sound liquidity and company fundamentals.

Jonathan Behr, vice president at Duff &Phelps, said Trust - one of several new financial institutions formed after the liberalisation of Zimbabwe's financial sector in the early 1990s - had performed well under adverse economic conditions.

"Other factors that supported the ratings included the low-cost infrastructure, good risk management procedures and satisfactory capital adequacy ratio," he said.

Trust was earlier this year granted a commercial banking licence which will allow it to broaden the range of services it offers.

The bank is also actively looking to increase its capital through a link- up with an international institution.

But Behr said the ratings were constrained by the severe economic circumstances in Zimbabwe which have significantly increased the potential for bad debt write-offs.

"A further level of risk is implied by the lack of business diversification as well as the large size of individual exposures," Behr said.

Trust is the second Zimbabwean bank to have its credit rating reviewed this year after Standard Chartered Bank which was accorded an AA long-term domestic rating this month.