GIB boost as agency affirms key rating
Manama, August 3, 2011
International credit rating agency Moody's Investors Service has affirmed Bahrain-based Gulf International Bank's (GIB) long-term foreign currency deposit rating of A3 with a negative outlook.
GIB's short-term rating remains unchanged at P-2.
Moody's explained in a public statement that the ratings affirmation came as a consequence of the bank's successful progress in restoring its franchise strength and improving its risk positioning.
"The re-orientation of GIB's regional wholesale lending business towards higher-yielding large and mid-corporate segments, away from less profitable project and syndicated finance, would achieve improved returns over the medium term," the agency said.
GIB has taken parallel steps to strengthen its risk positioning by reducing leverage to under four times, from more than six times in 2008.
"The bank has also strengthened its liquidity profile by increasing its proportion of medium-term funding and reducing the average maturity of its loan book," Moody's added.
"The affirmation of the bank's ratings is a very significant achievement," said GIB chief executive officer Dr Yahya A Alyahya.
"It comes at a time when Moody's has been downgrading other banks, both regionally and internationally, that have been placed on review for possible downgrading," he said.
He said that GIB's funding profile has substantially improved over the past few years as it has taken proactive measures to reduce the mismatch in the maturities of its assets and liabilities and significantly reduced its dependency on short-term funding.
"The bank's efforts to deleverage and derisk the balance sheet have also significantly strengthened its financial position and enhanced its capital adequacy ratios," he said.
"We are delighted that among the many banks under review by Moody's for a possible downgrade, GIB has had its ratings confirmed," he added.
"This follows the recent reaffirmation of GIB's ratings by the international credit rating agencies Fitch and Standard & Poor's.
"The reaffirmation of GIB's ratings by all three major credit rating agencies clearly signifies that GIB's business activities and financial condition have not been impacted in any way by recent events regionally or by turmoil in the international markets.
"Risk mitigation actions taken over the last two years have helped to protect the bank from external shock," he said.
"GIB's strong ownership structure, its exceptionally strong capitalisation and efficiency, and improved liquidity levels have led to the ratings affirmation, which also reflects the bank's commitment to continue to strengthen its franchise in the GCC," he added.
GIB is a leading bank in the Middle East with its principal focus on the GCC states. – TradeArabia News Service