Moody’s reaffirms Arab Bank’s A3 rating

Published December 28th, 2009 - 01:49 GMT

Moody’s reaffirms Arab Bank’s A3 rating with ‘Stable’ outlook.  Among the important drivers for reaffirming the rating includes its franchise value both locally and internationally, its asset quality, core earnings, strong capital base and comfortable levels of liquidity. A ‘Stable’ outlook has been assigned to the bank, as it has not been affected to a great extent by the recent global financial turmoil, given its conservative investment, liquidity and risk profile, combined with strong capitalization levels.

According to the recent report issued by Moody’s Investors Service, Arab Bank has a strong domestic and regional presence, with an asset base that is geographically diversified over 30 countries around the world and well diversified across all sectors of the economy. Moody’s report emphasized the Arab Bank’s conservative strategy and its approach in managing risks, including its modest market risk profile has helped in shielding the bank from unfavorable market conditions. The report noted the well managed asset quality despite the difficult global market conditions. It also highlighted that the loan loss provisions sustained on certain loan exposures were easily absorbed by the bank’s strong core revenues that are generated in the form of interest and fee income.

The report emphasized Arab Bank’s reputable brand name that underpins Arab Bank’s franchise strength, linked to decades of continuous success and achievements, and being the most prominent and well-known banking institutions in the MENA region. The value of this distinctive franchise is evidenced by the increasing confidence and loyalty of its depositors, which translates into a strong customer base with a sustainable core deposits, underpinning its robust liquidity profile.

A high level of corporate governance and the strength of internal controls and risk management processes at the bank were highlighted in the report, in addition to the good level of financial statements reporting disclosures that are prepared in accordance with International Financial Reporting Standards. The report also highlights the key role of the Chairman and Chief Executive Officer, Mr. Abdel Hamid Shoman, in forming and executing Arab Bank's strategic direction. It also highlights the role of the various board committees in overseeing the execution of the board’s decisions as well as the performance of senior management.

The report underlines the bank’s proven track record of stable core earnings stream that are generated from its corporate banking and commercial operations, and highlighted the increasing growth of its retail and private banking earnings, reflecting the success of the highly diversified business model adopted by Arab Bank. The report also emphasized Arab Bank’s success in maintaining an optimal management of expenses.

The report emphasized many of the bank’s strong financial ratios. Liquid assets comprising over 40% of total assets, while core deposits comprising more than 80% of overall deposits reflecting a high level of stability and a solid funding base backing the ample liquidity the bank enjoys.  The report underlined the bank’s comfortable loan to deposit ratio of less than 70% as well as the strong capital adequacy ratio of over 16% calculated under Basel II, thus exceeding the prudential limits set by the regulatory authorities.  The report stresses that core liquidity remains high at the group level and that it continues to be an important pillar of the Bank’s strategic direction, whilst capitalization remaining very strong and therefore providing a comfortable cushion to the bank to absorb any unforeseen losses. 
Mr. Abdel Hamid Shoman stated that affirmation of the rating reflects the confidence of the various parties dealing with Arab Bank and confirms the bank's permanence in the Arab and international markets.


© 2000 - 2019 Al Bawaba (www.albawaba.com)

You may also like