Global Arab Network | Byblos, BLOM & Audi - Fitch Upgrades Lebanese Banks on Sovereign Rating Action

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Byblos, BLOM & Audi - Fitch Upgrades Lebanese Banks on Sovereign Rating Action

Global Arab Network - - Gamal Ragay

Thursday, 01 April 2010 13:25

Fitch Ratings has today upgraded Byblos Bank S.A.L's (Byblos) and Bank Audi S.A.L's (Audi) Long-term Issuer Default Ratings (IDRs) to 'B' from 'B-'. The Outlook is Stable.

Fitch also affirmed a third Lebanese bank's, BLOM Bank, Support Rating at '5'. The full list of ratings is listed at the end of this commentary.

The upgrades follow the same action on Lebanon's Long-term local and foreign currency IDRs to 'B' from 'B-' on 31 March 2010, with Stable Outlook.

Byblos's and Audi's IDRs and Outlooks are closely related to, and constrained by, those of the sovereign given that about half of the banks' balance sheets remain invested in government debt, either through holdings of government paper or maintained as a reserve with the central bank.

Lebanon's banking system is one of the country's main strengths. Liquid and consistently profitable, the Lebanese banks have withstood the effects of the global credit crunch and the international economic challenges as well as the recent political unrest. Strict and effective restrictions imposed by the Central Bank of Lebanon (BdL), accompanied by well-contained loan growth in the past few years and low reliance on wholesale funding as well as strong customer deposit growth (up 22% and 15% in 2009 and 2008, respectively), have allowed Lebanese banks to maintain relatively strong performances in recent years.

Byblos:

Long-term foreign currency IDR upgraded to 'B' from 'B-'; Outlook Stable.

Short-term foreign currency IDR affirmed at 'B'

Individual Rating affirmed at 'D'

Support Rating affirmed at '5'

Support Rating Floor affirmed at 'CCC'

Audi:

Long-term foreign currency IDR upgraded to 'B' from 'B-'; Outlook Stable.

Short-term foreign currency IDR affirmed at 'B'

Individual Rating is 'D'

Support Rating affirmed at '5'

Support Rating Floor affirmed at 'CCC'

BLOM:

Support Rating affirmed at '5'.

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.

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