Ratings of Arab National Bank lowered; Outlook is â€˜Stableâ€™
Capital Intelligence Ratings (CI Ratings or CI), has announced that because of the recent change in the Sovereign Ratings of the Kingdom of Saudi Arabia, it has lowered the Financial Strength Rating (FSR) and the Foreign Currency Ratings (FCRs) of Arab National Bank (ANB), based in Riyadh, Saudi Arabia.
The Long-Term FCR is lowered to ‘A’ from ‘A+’ and the Short-Term FCR is lowered to ‘A2’ from ‘A1’. At the same time, the Outlook is changed to ‘Stable’ from ‘Negative’.
The change in the Sovereign Ratings also affects the Bank’s FSR, which is lowered to ‘A’ from ‘A+’. The Outlook for this rating is also changed from to ‘Stable’ from ‘Negative’.
The ratings are supported by ANB’s strong asset quality (including loan-loss reserve coverage), continued growth in customer deposits contrary to the sector trend, and the Bank’s historically strong franchise in the kingdom. The ratings are constrained by the Bank’s relatively low capital profile, a low stock of medium/long-term funding, and high related-party exposure.
Because of the Bank’s systemic importance, the likelihood of official support is considered to be very high. Moreover, support from its major shareholders would probably be forthcoming in the unlikely event it is needed. Consequently, the Support Rating remains at ‘2’.