BMI Bank's business 'is robust and profitable'
Manama, August 5, 2014
BMI Bank chief executive Jamal Al Hazeem has reiterated the bank continues to have a robust and profitable core business.
"We continue to maintain an excellent capital adequacy ratio of over 15 per cent with very strong liquidity," Al Hazeem said reacting to a ratings downgrade by Standard & Poor's Ratings Services (S&P), in a report in the Gulf Daily News (GDN), our sister publication.
"Our focus is on competitive, unique and innovative financial solutions as we move forward towards finalising the operational aspects of our business combination with Al Salam Bank Bahrain," he added.
On July 31, S&P lowered its long-term rating on BMI Bank to 'BB' from 'BB+'.
The ratings agency said the outlook for the bank was stable and affirmed a 'B' short-term rating.
BMI Bank is now a fully-owned subsidiary of Al Salam Bank.
Both entities together have a total consolidated asset base of $5 billion and a capital base of $817 million as of March 31.
The combination of the two banks represents the second-largest Islamic bank in Bahrain.
BMI Bank will continue to operate as a separate entity, under its own brand name, over the next two to three years.
This is for regulatory purposes, as the bank will need to convert to an Islamic bank.
BMI Bank's systems and policies have already been integrated into Al Salam Bank's structure.
Both entities are closely managed and supervised by a joint management committee, and they collaborate on key business development activities and use each other's distribution channels.
S&P said it believed BMI Bank's business and financial profiles could eventually benefit from being part of a larger entity in Bahrain - one that has stronger capitalisation and better asset quality.
However, it thought that the key challenges for BMI Bank as a stand-alone entity had not materially changed.
"We believe the recently completed merger might generate some benefits to both banks - such as a stronger franchise, enhanced revenue generation, and cost optimisation.
"We believe it will take some time before these benefits become visible," the ratings agency said. - TradeArabia News Service