Bahrain
Kuwait
Oman
Qatar
Saudi Arabia
UAE
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In September Fitch Ratings affirmed Saudi Arabia-based Riyad Bank's (RB) Long-term Issuer Default Rating (IDR) at ‘A+' with a Stable Outlook. Simultaneously the agency affirmed RB's Short-term IDR of ‘F1', Individual Rating of ‘B/C', Support Rating of ‘1', and Support Rating Floor of ‘A+'. The agency also affirmed the $500m senior unsecured notes, issued by RB, at ‘A+'.
According to Fitch, RB's Long- and Short-term IDRs and Support Rating reflect the extremely high probability that support would be forthcoming from the Saudi authorities in case of need. The Individual Rating reflects the bank's strong commercial franchise, consistent profitability and good capitalisation. It also reflects the risks inherent in the Saudi operating environment and RB's concentrations in loans and deposits as well as the market risks from the bank's investment portfolio.
RB, a full service bank, is 51.3 percent government/quasi-government-owned and is listed on the Saudi stock market (Tadawul). It is the fourth-largest bank in Saudi Arabia in terms of total assets, with an approximate market share of eleven percent of system assets at end-2008.
And RB continued to be strongly profitable in H1 2009 despite a fifteen percent y-o-y decline in net income. The fifteen percent increase in net special commission income, RB's most important revenue source, was countered by impairments on investments and (to a lesser extent) higher loan impairment charges in the first half of the year.
Fitch expects the downward trend in performance to continue when compared to 2008, particularly given Saudi Arabia's slowing economy and the bank's lower growth in business volumes. Nonetheless, the agency expects RB's strong franchise and large customer base to provide it with enough profits from its core banking businesses to absorb higher impairment charges.
According to Fitch, RB's Long- and Short-term IDRs and Support Rating reflect the extremely high probability that support would be forthcoming from the Saudi authorities in case of need. The Individual Rating reflects the bank's strong commercial franchise, consistent profitability and good capitalisation. It also reflects the risks inherent in the Saudi operating environment and RB's concentrations in loans and deposits as well as the market risks from the bank's investment portfolio.
RB, a full service bank, is 51.3 percent government/quasi-government-owned and is listed on the Saudi stock market (Tadawul). It is the fourth-largest bank in Saudi Arabia in terms of total assets, with an approximate market share of eleven percent of system assets at end-2008.
And RB continued to be strongly profitable in H1 2009 despite a fifteen percent y-o-y decline in net income. The fifteen percent increase in net special commission income, RB's most important revenue source, was countered by impairments on investments and (to a lesser extent) higher loan impairment charges in the first half of the year.
Fitch expects the downward trend in performance to continue when compared to 2008, particularly given Saudi Arabia's slowing economy and the bank's lower growth in business volumes. Nonetheless, the agency expects RB's strong franchise and large customer base to provide it with enough profits from its core banking businesses to absorb higher impairment charges.
Pipe dreams
Posted by TALAL on 20 December 2009 at 18:19 UAE time
With all due respect the list in not only wrong but misleading as well. I agree with Paddy that you need to come up with more meaningful criteria for ranking Banks as this doesn't work at all. When new financial results are out next year at least 3 on the list may end up up the creek without a paddle.
Posted by TALAL on 20 December 2009 at 18:19 UAE time
With all due respect the list in not only wrong but misleading as well. I agree with Paddy that you need to come up with more meaningful criteria for ranking Banks as this doesn't work at all. When new financial results are out next year at least 3 on the list may end up up the creek without a paddle.
Agree with the list
Posted by SG, Kuwait, Kuwait on 9 December 2009 at 09:50 UAE time
I have been working in the corporate banking field for over 5 years now and the banks listed above are quite secure. Choosing randomly and checking the historic audited financials you will see that these banks have been taking adequate provisions over the years unlike banks like Commercial Bank of Kuwait that took extreme sudden provisions making them reporting losses in 3Q of 09 whereas KD100m for the same period the previous year; that goes to show the type of credit they run. As for all the questions Paddy is asking, well an article that answers all those questions might as well be a book cos you are asking for financial analyses of each bank which could easily need 100 pages or so (4 pages each minimum). This report is a morale booster but is based on financials issued by the best international auditors. and, by the way, i do not work in any of those top banks but i intend to.
Posted by SG, Kuwait, Kuwait on 9 December 2009 at 09:50 UAE time
I have been working in the corporate banking field for over 5 years now and the banks listed above are quite secure. Choosing randomly and checking the historic audited financials you will see that these banks have been taking adequate provisions over the years unlike banks like Commercial Bank of Kuwait that took extreme sudden provisions making them reporting losses in 3Q of 09 whereas KD100m for the same period the previous year; that goes to show the type of credit they run. As for all the questions Paddy is asking, well an article that answers all those questions might as well be a book cos you are asking for financial analyses of each bank which could easily need 100 pages or so (4 pages each minimum). This report is a morale booster but is based on financials issued by the best international auditors. and, by the way, i do not work in any of those top banks but i intend to.
Tangible evidence missing
Posted by Paddy, Dubai, UAE on 26 November 2009 at 00:04 UAE time
The report talks about the performance of each bank at a very high level without delving deep into the numbers. For example, what is the net NPL for each bank in comparison with their assets? What is the exposure ratio (total exposure to the risky sectors out of the total assets) of each bank to risky sectors like Credit Cards, Construction & Real Estate etc? What is the recovery position with respect to Credit Card advances? What is the exposure of each bank (especially UAE and Saudi banks) to the Saad and Algosaibi groups? Have they kept aside provisions against these troubled assets? What has each bank done differently to tide over the financial crisis? HAs there been any fresh capital infusion into any of these banks? What is the Capital Adequacy Ratio of these banks? The lack of transparency with regard to reporting in the Middle East financial sector means that the banks may not have fully reported their bad assets. Maybe the report is intended to be a morale booster to the general public and not exactly based on hard facts.
Posted by Paddy, Dubai, UAE on 26 November 2009 at 00:04 UAE time
The report talks about the performance of each bank at a very high level without delving deep into the numbers. For example, what is the net NPL for each bank in comparison with their assets? What is the exposure ratio (total exposure to the risky sectors out of the total assets) of each bank to risky sectors like Credit Cards, Construction & Real Estate etc? What is the recovery position with respect to Credit Card advances? What is the exposure of each bank (especially UAE and Saudi banks) to the Saad and Algosaibi groups? Have they kept aside provisions against these troubled assets? What has each bank done differently to tide over the financial crisis? HAs there been any fresh capital infusion into any of these banks? What is the Capital Adequacy Ratio of these banks? The lack of transparency with regard to reporting in the Middle East financial sector means that the banks may not have fully reported their bad assets. Maybe the report is intended to be a morale booster to the general public and not exactly based on hard facts.
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