Fitch affirms SAMBA Financial Group at 'A'/'F1'; outlook Stable

The Support Rating Floor is unchanged at 'A'. The Outlook for the Long-term IDR is Stable.

The ratings reflect SAMBA's leading franchise, strong and consistent performance, low cost base, sound funding profile and the probability of support. The ratings also reflect moderate concentrations in the corporate loan portfolio and funding base. The bank's Support Rating Floor reflects the extremely high probability of support from the Saudi authorities, should it ever be required. Fitch's view of support is based on the Saudi government's 43.4% stake and the bank's large franchise.

SAMBA's 2006 results showed a strong performance with reported net income of SAR5.2bn, equating to an operating return on equity of 36%. The bank benefits from the buoyant Saudi economic environment, allowing it to grow its loan book and fee income. However, brokerage and mutual funds fee income of about SAR2.3bn in 2006 is highly unlikely to be repeated in 2007 after the correction in the domestic stock market. Consumer loan growth for the banking sector will also slow in 2007 after the market correction and new regulations from the bank's regulator, SAMA. The Fitch eligible capital ratio at end-2006 was an adequate 16.9%.

SAMBA was established in 1980 to take over the Jeddah and Riyadh branches of Citibank N.A. Citibank remained a minority shareholder until 2004 and left behind a strong legacy of corporate governance, risk management expertise and operating systems and procedures. The bank is the second-largest in the Kingdom and operates through a network of 66 domestic branches and one in London. SAMBA's main shareholders are the Public Investment Fund (22.9%), General Organisation for Social Insurance (11.2%) and a pension fund (9.3%), all of which are government/quasi-government entities.