Global Arab Network | Saudi Arabia: CI Affirms Ratings of Arab National Bank

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Saudi Arabia: CI Affirms Ratings of Arab National Bank

Global Arab Network - - Rabih Serrai

Tuesday, 07 June 2011 00:42

Saudi Arabia CI Affirms Ratings of Arab National Bank

Global Arab Network - Capital Intelligence (CI) has announced that it has affirmed the ratings of Arab National Bank (ANB), based in Riyadh, Saudi Arabia. The Long-term Foreign Currency rating is affirmed at ‘A+‘ and the Short-term Foreign Currency rating at ’A1,’ with a ‘Stable’ Outlook. At the same time CI affirmed the Bank’s Financial Strength rating at ‘A+,’ also with a ‘Stable’ Outlook. Because of the Bank’s ownership, support from its major shareholders is expected to be forthcoming in the unlikely event it is needed. Consequently, the Support level remains at ‘2.’, Global Arab Network reports according to a press statement.

The ratings are underpinned by the improvement in the Bank’s asset quality, specifically the restoration of full coverage by loan-loss reserves, and by a marginal increase in operating profitability highlighted by continuing good cost control. Ratings are constrained by high borrower concentration, decline in core net fees and commissions and the reduction net profit caused by the high level of loan-loss provisioning.

ANB began operations in the kingdom in 1949, and in 1979 the six Saudi branches of Jordan’s Arab Bank Group were locally capitalised in accordance with Saudi law and converted into a joint-venture bank. At that time, Arab Bank Group subscribed to the maximum permissible 40% stake. That stake, which is now held by Arab Bank plc has not changed, and other key shareholders include the General Organisation for Social Insurance (11%) and Rashed A Al-Rashed & Sons Co, a major family-owned Saudi company (10%). Most of the remainder is public float. Arab Bank plc holds a proportional representation on ANB’s Board of Directors.

At year-end 2010, ANB ranked as the kingdom’s seventh-largest bank by total assets and sixth by total capital, although positions five through seven are all very close in size. Its balance sheet displayed a figure for total assets of SAR116 billion (a market share of about 8%) and for total capital of SAR16.4 billion.

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