Tuesday 14, March 2017 by Georgina Enzer

Ratings of Al Rajhi Banking & Investment Corp. lowered; Outlook is ‘Stable’

Because of the recent change in the Sovereign Ratings of the Kingdom of Saudi Arabia, CI Ratings has lowered the Financial Strength Rating (FSR) and the Foreign Currency Ratings (FCRs) of Al Rajhi Banking & Investment Corp. (ARABIC), based in Riyadh, Saudi Arabia. 

The Long-Term FCR is lowered to ‘A+’ from ‘AA-’ and the Short-Term FCR is lowered to ‘A2’ from ‘A1’.  At the same time, the Outlook is changed to ‘Stable’ from ‘Negative’. These ratings are constrained by the sovereign rating.

The change in the Sovereign Ratings also affects the Bank’s FSR, which is lowered to ‘A+’ from ‘AA-’.  The Outlook for this rating remains ‘Stable’. 

The ratings are supported by ARABIC’s strong deposit-gathering capability, a loyal and stable customer deposit base and consequent benefits to its liquidity, as well as sound asset quality (including diversification), very strong capital adequacy, and continued strong profitability. The ratings are constrained by the declining (until 2016) net financing margin and profitability at all levels, as well as by the current operating environment. 

In view of the Bank’s prominent position in the Saudi banking sector, official financial support is expected to be forthcoming in the unlikely event it is needed.  Consequently, the Support Rating remains at ‘2’. 

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