Moody's reaffirms Arab Bank's A2 rating

Among the important drivers to underpin the bank's financial strength includes its franchise value, asset quality, strong profitability, strong capital base and comfortable levels of liquidity. A 'Stable' outlook has been assigned to the bank, as it has not been affected by the recent global financial turmoil, which is a result of its conservative investment, liquidity and risk profile, according to Moody's. Furthermore, Moody's reaffirmed the Bank's long-term rating of A3.

According to the recently issued report by Moody's Investors Service, Arab Bank has a strong domestic and regional presence, with an asset base that is geographically diversified over 30 countries around the world. Its network is supported by the bank's ability to expand its operations in these countries, and its contribution to large and medium sized investment projects that are well-diversified over several sectors, which enabled the bank to avoid the sharp volatilities affecting the international financial markets. Moody's report emphasized the Arab Bank's conservative strategy and its approach in managing risks, including its modest market risk profile. Moody's also stressed that the bank's credit facilities are highly diversified which was yet another reason that provided a safe ground and diversity for the bank, and assisted it in avoiding the global economic and financial turbulences.

The report emphasized the Arab Bank's reputable brand name, which is linked to decades of continuous success and achievements. The value of this distinctive franchise is evidenced by the increasing confidence and loyalty of its depositors, which translates into a strong customer base and a sustainable core of strong retail deposits, further underpinning a robust liquidity profile and enabling the bank to efficiently deal with the demands of local, regional and global markets.

A high level of corporate governance and the strength of internal controls and risk management processes at the bank were highlighted in the report, in addition to the good level of financial reporting disclosure and transparency. The report also highlights the key role of the Chairman and Chief Executive Officer, Mr. Abdel Hamid Shoman, in forming and executing Arab Bank's strategic direction.

The report underlined the bank's consistently strong records of profitability and earnings, largely from its corporate banking and commercial operations, and highlighted the increasing growth of its retail and private banking earnings. This reflects the success of the highly diversified business model adopted by Arab Bank. The report also emphasized Arab Bank's success in maintaining an optimal management of expenses and costs, which is positively reflected on its financial efficiency ratios; like costs-to-income ratio.

The report emphasized many of the bank's strong financial ratios. Liquid assets comprised 40% - 50% of total assets, while core deposits comprised more than 80% of overall deposits reflecting a high level of stability and a solid funding base backing the ample liquidity the bank enjoys. The report also underlined a strong capital adequacy ratio (CAR) under Basel 1 and Basel II, which exceeds the prudential limits set by the regulatory authorities and the average industry levels, with a strong equity level that stood at 16.5% of total assets.

Mr. Abdel Hamid Shoman stated that the high ratings assigned to the bank reflect the confidence of the various parties dealing with the bank on one hand, and the successful strategy followed by senior management in addition to the endless efforts and dedication of the bank's employees on the other hand. He also stressed that the bank's management is keen on maximizing depositors' returns whilst ensuring the highest levels of safety, especially during the current tough market conditions. He added that the rating assigned by Moody's confirms the bank's permanence in the Arab and the international markets and its continuously successful relationships with investors to accelerate economic development.