Tuesday 14, March 2017 by Georgina Enzer

Ratings of The Saudi Investment Bank lowered; Outlook is ‘Stable’

Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, has announced that because of the recent change in the Sovereign Ratings of the Kingdom of Saudi Arabia, it has lowered the Long-Term Foreign Currency Rating (FCR) of The Saudi Investment Bank (SAIB), based in Riyadh, Saudi Arabia.

The Long-Term FCR is lowered to ‘BBB+’ from ‘A-’ and the Short-Term FCR remains unchanged at ‘A3’. The Outlook remains ‘Stable’. The Bank’s Financial Strength Rating (FSR) is not affected by the Sovereign and remains at ‘BBB+’ on a ‘Stable’ Outlook.

The ratings are supported by continuing improvement in asset quality, strong growth in customer deposits (with consequent improvement in loan-based liquidity ratios and reduction in reliance on more volatile short-term funding), and SAIB’s sound franchise in trade finance. The rating is constrained by the high share of loans in the balance sheet and a high level of sector concentration, by the still relatively tight loan-based liquidity ratios, and by the falling ROAA, which is partly the result of a higher cost of risk.

Official support is expected to be forthcoming in the unlikely event it is needed. Consequently, the Support Rating remains at ‘2’.

 

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