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Bahrain's NBB gets key ratings boost

Manama, May 28, 2014

Credit rating agency Capital Intelligence (CI) has affirmed National Bank of Bahrain's (NBB) long and short-term foreign currency ratings at 'BBB' and 'A2', respectively, on a 'stable' outlook.

The financial strength rating of 'A' is also affirmed on the basis of its solid capital adequacy ratio, very high liquidity, strong business franchise and good profitability metrics.

The agency said as Bahrain's flagship bank, NBB commands an important position in the local banking sector, reported the Gulf Daily News, our sister publication.

The bank's market share and substantial indirect government ownership bestow significant benefits to its business franchise.

Management is experienced and follows prudent risk management practices, Capital Intelligence said.

Notwithstanding the economic recovery underway in Bahrain, credit risk - particularly in the trade and real estate sectors - remains rather high, reflecting the challenging environment in Bahrain, it added.

In this regard, NBB's exceptionally high liquidity coupled with an ongoing cautious lending policy are important risk mitigants, the agency said.

The bank's already strong liquidity rose further in the year under review, driven by a sustained contraction in loans.

The bulk of liquidity continued to be deployed into Bahrain treasury bills and government bonds.

Although concentration risk has increased as a result, CI does not view this as being a negative rating factor given the nature and quality of these assets (mostly 'BBB' rated).

NBB's liquidity ratios are currently among the best in the GCC region, it added.

Commenting on the rating, NBB chief executive Abdul Razak Al Qassim said: "The affirmation of ratings is a clear reflection of the agency's confidence in Bahrain's banking system in general and the strong financial position in particular."

He added that with a strong capital adequacy ratio, high level of liquidity and a dominant position in the domestic banking industry, the bank was well-positioned to capture new business opportunities as it move into what is expected to be a positive growth phase for the regional and domestic economies.-TradeArabia News Service




Tags: Bahrain | NBB | Ratings |

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