Standard & Poor's affirms GIB's credit ratings

Press release
Published January 15th, 2012 - 08:54 GMT
Dr. Yahya A. Alyahya, GIB’s Chief Executive Officer
Dr. Yahya A. Alyahya, GIB’s Chief Executive Officer

Standard & Poor's Ratings Services (S&P) has recently affirmed Gulf International Bank’s (GIB) long-term and short-term counterparty credit ratings at BBB+ and A-2 respectively. The agency has also affirmed the ratings outlook as stable.

S&P said in its report that the ratings on GIB reflect its “very strong” capital and earnings, and “strong” liquidity. The rating criteria also took into consideration the Bank’s “adequate” risk position and “moderate” business position.

The agency explained that its assessment of GIB's capital and earnings as "very strong" reflects the Bank’s very robust capitalization. S&P commented that GIB's risk-adjusted capital ratio before adjustments is expected to stay above 15% in the next 18 to 24 months. GIB's "strong" liquidity is another mitigating factor, S&P stated. S&P noted that “on June 30, 2011, a high 38% of its assets were in the form of cash and short-term bank placements.”

Moreover, S&P considered “GIB's risk position to be ”adequate,” taking into consideration its more granular loan book compared with peers', as well as the generally lower-risk profile of its borrowers…. GIB's limited exposure compared with peers' to the riskier real estate and construction sectors is well secured by good quality collateral and conservative provisioning.”

The agency also stated that GIB is one of the most efficient GCC banks, noting that “Its ratio of non-interest expenses to total assets averaged 0.6% over the past three years”. It added that GIB “is implementing a new business plan involving the start-up of a retail bank across the Gulf but initially operating in Saudi Arabia. This is important for GIB's business model because it provides comfort to counterparties dealing with GIB.”

Finally, S&P explained that GIB’s Stable outlook “balances our opinion of the Bank’s strong capitalization and shareholder support…. The outlook also factors in our expectation that GIB will likely maintain its asset quality and liquidity ratios at the current adequate levels.”

Dr. Yahya A. Alyahya, GIB’s Chief Executive Officer, commented: “We are very pleased with the ratings affirmation by S&P, and we view it as an endorsement of the actions taken by the Bank and its shareholders to address the challenges created by the changes in the operating environment for financial institutions.”

He emphasized that “GIB’s strong ownership structure, its exceptionally strong capitalization and efficiency, and improved liquidity levels have led to the ratings affirmation, which also reflect the Bank’s commitment to continue to strengthen its franchise in the GCC.”

GIB is a leading bank in the Middle East with its principal focus on the GCC states. Its primary shareholder is the Public Investment Fund of Saudi Arabia. The Bank provides client-focused, innovative financial products and services to a wide customer base in the region, including asset management,, IPOs, private equity placement, mergers & acquisitions, Sukuk/bond issues and Sharia-compliant banking services. 

Background Information

Gulf International Bank

Gulf International Bank B.S.C. (GIB) was established in the Kingdom of Bahrain in 1975, and commenced operations in 1976. In 2017, GIB became the first foreign domiciled bank to be granted approval from the Saudi Arabia Council of Ministers to establish a local commercial bank in the Kingdom of Saudi Arabia.

Consequently, GIB's branch offices in the Kingdom will become part of the Saudi Arabian subsidiary, with the country headquarters located in Al Dhahran.

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