Fitch affirms ratings for 4 Saudi banks with stable outlook

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Fitch Ratings affirmed the Long-Term Issuer Default Ratings (IDRs) of Saudi National Bank (SNB) and Al Rajhi Bank at A-, as well as Saudi British Bank (SABB) and Riyad Bank at 'BBB+' with Stable outlook.  

In a recent report, the agency stated that SNB rating is underpinned by a strong company profile supporting well-diversified and resilient earnings, strong funding and liquidity, as well as sound asset quality and capitalization.

It further reflects that pressures from the economic environment, due to the coronavirus crisis and lower oil prices, have eased and are now less likely to affect the bank’s financial profile, the report said.

On the other hand, Al Rajhi Bank is supported by a strong domestic retail franchise, which results in a clear funding advantage over peers, robust profitability, superior asset quality, lower concentration risks and healthy capitalization.

Profitability is strong, driven by a dominant retail franchise and Islamic status resulting in the lowest cost of funding in the sector and by strong pricing power, Fitch noted.

SABB rating reflects its strong capital base, sound funding and liquidity, and adequate company profile. Operating profitability to average risk-weighted assets ratio is below peers, but improved in Q1 2021 to 2.1% due to lower loan impairment charges and revenue and cost synergies that benefit the bank’s profitability.

Elsewhere, Riyad Bank’s rating reflects the bank’s well-established and improving company profile, sound capitalization, strong profitability and healthy funding and liquidity.

The report added that the rating captures sound asset quality, though weaker than larger peers, and high concentration risk.