Fitch affirms National Bank of Bahrain ratings

Manama, April 18, 2012

Fitch Ratings has affirmed National Bank of Bahrain's (NBB) long-term issuer default rating (LT IDR) at BBB and Viability Rating (VR) at bbb.

The view reflects Fitch's view that there is a high probability that the bank would receive support from Bahrain if required.

This view is based on NBB's government-related shareholders and its leading franchise in Bahrain.

A change in the Bahrain sovereign rating would likely impact the NBB's Support Rating Floor, and therefore its LT IDR.

This is unlikely at present, as reflected in the stable outlook on the sovereign rating, the agency said.

The VR reflects NBB's consistent profitability, healthy asset quality, comfortable liquidity and strong capitalisation.

It also considers NBB's high reliance on a relatively small and competitive domestic environment and concentrations in loans and deposits.

Given the concentration of NBB's activities in Bahrain, a deterioration in the local operating environment could negatively affect the bank's VR, but this could also impact the sovereign rating, the agency said.

Despite an uncertain operating environment, NBB's operating performance proved to be resilient in 2011, Fitch Ratings added.

Net profit increased six per cent year-on-year, driven by healthy revenue growth and well-contained operating expenses.

Fitch expects profitability to improve modestly in 2012, although it may be constrained by the bank's efforts to maintain reserve coverage, which has been declining in recent years.-TradeArabia News Service

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