The international credit rating agency, Moody’s Investors Service, has upgraded Gulf International Bank’s (GIB) long-term deposit rating to A3 from Baa1. The new rating reflects a material improvement in the Bank’s earnings quality and risk profile.
At the same time, Moody’s reaffirmed GIB’s short-term deposit rating of P-2 and the Financial Strength Rating (FSR) of C, while the outlook on all ratings is Stable.
Moody’s explained that the rating upgrade “is the result of the strengthening of GIB’s regional merchant banking franchise in the Middle East and the consequent improvement in earnings quality, as well as the improvement in the bank’s credit risk profile”.
Moody’s noted that “GIB retains its leading position as a provider of project and structured finance to businesses and governments of the Gulf Cooperation Council (GCC) states, within the context of growing business volumes and more intense competition. The bank is also expanding its investment banking and asset management businesses, which will increasingly contribute to earnings diversification.”
In addition, Moody’s referred to “the ongoing improvement in GIB’s credit risk profile, whereby international, non-relationship lending and high yield securities have been replaced by better quality loans in the GCC and by investment grade securities, reducing the bank’s provisioning requirement”.
Moody’s concluded that “enhanced earnings quality, in conjunction with reduced credit risk has improved the creditworthiness of GIB, justifying the upgrade.”
Commenting on the rating upgrade, Dr. Khaled M. Al-Fayez, GIB’s Chief Executive Officer, stated: “We are delighted with the upgrade of the bank’s long term deposit rating. GIB was among the first Gulf banks to be assigned investment grade credit ratings by all of the major international credit rating agencies and this rating upgrade ensures that GIB continues to be one of the highest rated financial institutions in the Middle East.”
Dr. Al-Fayez added: “This represents the second upgrade in Moody's long-term deposit rating in the last 18 months. The rating was upgraded from Baa2 to Baa1 in December 2003. It also follows an upgrade in Standard & Poor’s long-term deposit rating to A- in April 2005. Following the recent upgrade in the Moody's rating, GIB is now rated A- / A3 by all three international rating agencies: Moody's, S&P, and Fitch.”
Gulf International Bank is a leading merchant bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. It is one of the largest regional banks in the GCC, with more than $20 billion of its own assets and in excess of $15 billion of clients’ assets under management. With a proven track record spanning more than 28 years, GIB provides client-led, innovative financial products and services to a wide customer base in the region, including investment banking, asset management, project and structured finance and Islamic banking.
The six GCC governments, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, own 72.5 per cent of the bank, while the Saudi Arabian Monetary Agency owns 27.5 per cent. In addition to the Bank’s main subsidiary, Gulf International Bank (UK) Ltd., it has branches in London, New York, Riyadh and Jeddah, in addition to representative offices in Beirut and Abu Dhabi.
