GIB gets Fitch ratings upgrade

Manama, March 25, 2012

Bahrain-based Gulf International Bank said credit rating agency Fitch had upgraded its viability rating to ‘BBB-’ from ‘BB+,’ while its long-term issuer default and short-term ratings have been affirmed at ‘A’ and ‘F1’ respectively, with a stable outlook.

In its comments, Fitch said the upgrade was mainly to reflect the GIB's “significant improvement to the bank’s risk profile from restructuring, de-risking and de-leveraging initiatives” taken in the past few years.

The credit ratings agency said GIB had a strong liquidity position even without relying on its large investment portfolio which provides a sizable liquidity buffer.

'GIB's funding and liquidity position had strengthened with improving term structure in wholesale funding,' it added.

In its special comments, Fitch said the bank's 'balance sheet has been transformed.'

'GIB returned to profit in 2010 and its performance continues to improve, with net income for 2011 rising to $105 million. The viability rating represents an evaluation of the bank on a standalone basis excluding shareholder support,' it added.

'The bank had raised longer-term debt during 2011 at a relatively low cost, leveraging its shareholders’ support. This has enabled the Bank to improve asset-liability mismatches and reduce its reliance on expensive short-term funding.'

'Moreover, customer deposits had grown, with GCC governments and government-related entities being major depositors in the bank, the agency said.

Fitch also referred in its statement to GIB's strong capitalisation, providing a good buffer as the bank ventures into new markets and products.

Commenting on the rating upgrade, Dr Yahya A. Alyahya, GIB’s chief executive officer, said: “This is regarded as an independent validation of the actions taken over the last three years to restructure the Bank as well as our new business strategy.”

“The upgrade reflects Fitch’s assessment of GIB on a standalone basis without shareholder support and reflects an improvement in GIB’s fundamental financial strength and risk profile. This is particularly pleasing as it represents one of very few bank rating upgrades since the financial crisis,” Dr Alyahya added.-TradeArabia News Service

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