S&P raises ratings of 2 Saudi banks
Riyadh, May 31, 2010
Standard & Poor’s (S&P), a top financial research and ratings agency, has raised its ratings of two Saudi Arabia-based financial institutions based on their financial profile and stable outlook.
Al Rajhi Bank
Al Rajhi Bank's strong market position in the Saudi retail market, superior profitability, growth strategy with solid capital ratios, and improved risk management have strengthened the bank's financial profile, S&P said in a statement.
S&P has raised its long-term rating on Al Rajhi Bank to A+ from A, and has affirmed its A-1 short-term rating.
The ratings agency added that the stable outlook reflects its view that the bank should continue to benefit from its comparative advantage as a leading and well-entrenched Islamic bank in Saudi Arabia and maintain superior financial performance and capital adequacy.
"The rating action reflects our view that ARB's stand-alone credit profile has strengthened in the recent past, thanks to its unique market position in the Saudi retail market, increasingly diversified loan book, strong and resilient profitability, and growth strategy with solid capital ratios," said S&P’s credit analyst Nicolas Hardy.
The ratings on ARB reflect its strong capitalisation, resilient and superior profitability, lower concentrations in loans and deposits than peers, and high systemic importance stemming from its large domestic retail franchise, said S&P.
"The stable outlook reflects our expectation that ARB will retain its strong financial profile and leading commercial position in retail banking, despite increasing competition," said Hardy.
S&P has also upgraded its long-term rating on Samba Financial Group, a top banking products and services provider, to A+ from A and affirmed its A-1 short-term rating.
The ratings agency said Samba’s leading commercial position, resilient and solid operating revenue generation, and conservative deleveraging strategy have resulted in a strengthened financial profile.
S&P said the stable outlook reflected its view that Samba should continue to perform well and retain its dominant market position in Saudi Arabia.
“The rating action reflects our view that Samba's financial profile has continued to strengthen, on support from a resilient financial performance, solid capitalization, and strong funding and liquidity indicators," said Hardy.
The ratings agency also considered said Samba benefits from a superior market position in Saudi Arabia and a supportive business mix between retail and corporate banking.
Sambas’ stable outlook reflects S&P’s expectation that Samba will maintain its leading commercial position, solid capitalization, balanced risk profile, and solid operating revenues, it added in the statement. – TradeArabia News Service