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1080.O
1080.O
Standard & Poor's Ratings Services affirmed on Sunday its 'A/A-1' long- and short-term counterparty credit ratings on Arab National Bank (ANB). The outlook remains positive, according to CPI Financial.
According to the ratings agency, the affirmation reflects its view of ANB's sound business and financial profiles, supported by its strong operational performance and sound funding and liquidity metrics. These strengths are partly balanced by structural concentrations its risk profile features.
“While we have maintained our "strong" assessment of ANB's capital and earnings, we now see a higher likelihood of an improved assessment of this rating factor, given moderate risk asset growth, strong efficiency, low cost of risk, and a regulatory drive for higher capital. We calculated the bank's risk adjusted capital (RAC) ratio before concentration adjustments at 15.5 per cent as of Dec. 31, 2013. We'll monitor the bank's internal capital generation, earnings retention, and loan growth in the upcoming 18-24 months to decide if the bank could sustainably maintain this metric,” S&P stated.
“The starting point for assigning our ratings on ANB is its 'a-' anchor, which we base on our opinion of the banking system in the Kingdom of Saudi Arabia (AA-/Positive/A-1+), under our criteria,” S&P added.
“Our assessment of ANB's business position as "adequate" is supported by ANB's better business balance between retail and corporate banking than most domestic peers, and its average market position, with an about eight per cent to nine per cent market share in loans and deposits. Our risk position assessment for ANB is "moderate," primarily reflecting our view that business and geographic concentration risks are materially higher than those of peers that are located in countries with comparable economic risks. Funding is "average" and liquidity is "adequate," in our view. ANB is a self-funded entity, mainly relying on stable domestic customer deposits for its funding. About one-third of its assets is held in cash with the central bank or in Saudi government debt. We assess ANB's stand-alone credit profile (SACP) at 'a-'.
According to the ratings agency, the affirmation reflects its view of ANB's sound business and financial profiles, supported by its strong operational performance and sound funding and liquidity metrics. These strengths are partly balanced by structural concentrations its risk profile features.
“While we have maintained our "strong" assessment of ANB's capital and earnings, we now see a higher likelihood of an improved assessment of this rating factor, given moderate risk asset growth, strong efficiency, low cost of risk, and a regulatory drive for higher capital. We calculated the bank's risk adjusted capital (RAC) ratio before concentration adjustments at 15.5 per cent as of Dec. 31, 2013. We'll monitor the bank's internal capital generation, earnings retention, and loan growth in the upcoming 18-24 months to decide if the bank could sustainably maintain this metric,” S&P stated.
“The starting point for assigning our ratings on ANB is its 'a-' anchor, which we base on our opinion of the banking system in the Kingdom of Saudi Arabia (AA-/Positive/A-1+), under our criteria,” S&P added.
“Our assessment of ANB's business position as "adequate" is supported by ANB's better business balance between retail and corporate banking than most domestic peers, and its average market position, with an about eight per cent to nine per cent market share in loans and deposits. Our risk position assessment for ANB is "moderate," primarily reflecting our view that business and geographic concentration risks are materially higher than those of peers that are located in countries with comparable economic risks. Funding is "average" and liquidity is "adequate," in our view. ANB is a self-funded entity, mainly relying on stable domestic customer deposits for its funding. About one-third of its assets is held in cash with the central bank or in Saudi government debt. We assess ANB's stand-alone credit profile (SACP) at 'a-'.
Source:
Mubasher
