Manama,
Bahrain: Bank
ABC, headquartered in Bahrain and one of MENA’s leading international banks has
announced that the technical rating action due to Fitch Ratings’ downgrade of
Bahrain's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B+' from
'BB-', will not lead to imminent
pressure on the Bank’s funding or pricing, due to its resilient balance sheet
position and consistent growth strategy. Bank
ABC was previously rated by Fitch at BBB-, recognised to be an international
wholesale bank, but noted to be at Fitch’s maximum limit of three notches above
the sovereign rating. The downgrade of Bahrain by one notch to B+ has therefore
created a technical move of ABC’s rating lower to BB+, maintaining a
three-notch technical limit uplift to sovereign rating. However, Fitch has
reaffirmed the resilience of Bank ABC. Such reaffirmation resonates with other
rating agencies such as Standard & Poor (S&P) and Capital Intelligence
(CI), which are not bound by these technical limits. Indeed, both CI and
S&P reaffirmed the investment grade ratings in May/June 2020, recognising
the Bank’s financial strength and resilience and its ability to withstand the
extremely challenging conditions in its key markets.
S&P
further underscored that the BBB- stable outlook reflects its view of the
Bank’s strong financial profile and its strong capitalisation. S&P added
that, although lower oil prices and the coronavirus pandemic will test Bank
ABC's asset quality, the Bank's track record of prudent underwriting standards
and strong capitalisation would support its creditworthiness. Also, CI restored
the rating Outlook to Stable with a BBB+ rating as recently as September 1,
2020.
“Our underlying business and balance sheet
remains strong, with the latter being further bolstered by the retention of the
2019 dividend. On Basel III basis, H1
2020 CET1 was 16.0%, LCR 215% and NSFR 121%. All of the Bank’s stakeholders can
continue to place great confidence in ABC’s strength, strategy and asset
quality, recognised to be investment grade, but for this technical factor which
we all hope will only be temporary” says Dr Khaled Kawan, Group CEO Bank ABC.