CI revises outlook on Bank Audiâ€™s ratings to â€˜Stableâ€™
Following a sovereign rating action, Capital Intelligence Ratings (CI) has revised the ‘Outlook’ on the Long-Term Foreign Currency Rating (FCR) of Bank Audi to ‘Stable’ from ‘Negative’.
CI has concurrently affirmed both the Long- and Short-Term FCRs at ‘B’ and it remain constrained by the Sovereign Ratings. The rating action follows the revision of the ‘Outlook’ on Lebanon’s sovereign Long-Term FCR of ‘B’ to ‘Stable’ from ‘Negative’ on 7 April 2017.
The ratings reflect: a) the stabilisation of domestic political risk factors following the election of a president and the subsequent formation of a new government following two years of political standoff; b) easing tensions with Saudi Arabia and other key members of the GCC, which is likely to boost key sectors of the Lebanese economy, namely tourism and real estate; c) improvements in the policymaking environment, with parliament recently passing the annual draft budget law for the first time in a decade; d) the stable buffer of foreign exchange reserves, which provide adequate coverage of the country's external debt.
The Bank’s FCRs are highly correlated with the sovereign’s creditworthiness. Any improvement or deterioration in Lebanon’s creditworthiness would have a corresponding effect on the Bank’s FCRs. The Bank’s Support Rating is affirmed at ‘3’, which implies a high likelihood of support given Banque du Liban (BdL)’s record of assisting banks.
CI also announced that the Financial Strength Rating (FSR) of Bank Audi is affirmed at ‘BBB-’, with the ‘Outlook’ also revised to ‘Stable’ from ‘Negative’, to reflect the improved outlook on the sovereign risk profile. The FSR of Bank Audi and all other Lebanese banks is currently under annual review.