Rating agency Fitch IBCA downgraded its long-term credit rating for Byblos Bank SAL to “B+”, citing deteriorating economic conditions in Lebanon. The agency also changed its outlook for the bank from negative to stable, noting that Byblos has taken several measures to increase liquidity, raise provisioning charges and improve risk management.
The agency said the banks’ downgrade and change in outlook are linked to the sovereign ceiling, which followed similar sovereign changes in February. Fitch said that despite high investment in information technology, ATMs, and new technologies, a strong emphasis on cost control allowed Byblos to keep its cost-to-income ratio around 50 percent.
In parallel, Moody’s Investors Service maintained its “B-2”rating for the bank’s long-term deposit and affirmed a stable outlook. In a report issued in January, Moody’s said that outlook on Byblos’ financial strength rating remains stable although the operating environment is becoming more challenging as economic activity slows down. It added that the foreign currency deposit and debt ratings have negative outlooks and remain linked to the country ceiling.
According to Moody’s, Byblos Bank’s strong retail franchise should withstand increasing competition, while the bank’s foreign operations constitute a positive rating driver and provide the means for diversification. Additionally, the bank’s liquidity is sound and capital is likely to remain high in the foreseeable future. — ( Lebanon Invest )
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