Sign in
Moody’s raised the long-term deposit and senior unsecured ratings of the 11 lenders it rates, according to a statement (pdf). While the outlook for most banks was downgraded to stable from positive, Al Rajhi Bank’s outlook remains unchanged at stable.
The banks: Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSD), Alinma Bank, Arab National Bank (ANB), Bank AlBilad, Saudi Investment Bank (SAIB), Bank AlJazira, and Gulf International Bank (GIB).
The decision follows the upgrade of the Kingdom’s sovereign rating to Aa3, from A1, with a stable outlook, indicating an enhanced operating environment and increased government capacity to support the banking sector. Moody’s also upgraded the Kingdom’s Macro Profile from “Moderate+” to “Strong-.”
(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)
ALSO- The Baseline Credit Assessments (BCAs) were upgraded for SNB, SAB, and GIB, while the BCAs for the remaining eight banks were reaffirmed.
Uh, Enterprise, what are BCAs? BCAs are Moody’s evaluations of a bank’s standalone creditworthiness, reflecting its ability to meet financial obligations based solely on its own financial strength. These assessments consider factors such as capital adequacy, asset quality, profitability, liquidity, and risk management, excluding potential external support from governments or parent companies. BCAs provide a clear picture of a bank’s intrinsic financial health.
A tale of two outlooks: Bank ratings could improve if better operating conditions lead to stronger financial fundamentals, such as enhanced solvency and liquidity, or if Saudi Arabia’s government issuer rating of Aa3 is upgraded. Conversely, ratings may decline if rapid credit growth increases asset risks or funding challenges, a slowdown in non-oil GDP growth weakens the banks’ operating environment, or the Saudi government’s issuer rating is downgraded.
