Fitch affirms Al Rajhi Banking and Investment Corporation at 'A+'/ 'F1'; outlook stable

Fitch has affirmed Al Rajhi's Support Rating Floor at 'A+'.

Al Rajhi's IDRs, Support rating and Support Rating Floor reflect the extremely high probability of support from the Saudi authorities, in case of need. This is based on the strong history of support from the Saudi Arabian Monetary Agency and the bank's strong domestic franchise.

Al Rajhi continues to dominate the Islamic market segment and retail banking, which has been historically its main focus. The bank's Long-term IDR is unlikely to change unless the sovereign rating changes.

The bank's Individual Rating reflects a strong domestic franchise, wide margins and good profitability, whilst also considering Al Rajhi's very rapid growth, concentration in the retail sector and the impact on future profitability and asset quality of the slowdown in Saudi Arabia's economic growth.

Net income for Q109 increased 8% y-o-y driven by wide margins and higher fees. Costs increased 14% y-o-y due to higher financing impairment charges. The net financing portfolio showed no growth in Q109 and total assets remained broadly flat. The bank is well capitalised with a Tier 1 ratio at end-March 2009 of 16.1%.

Al Rajhi is the largest Islamic bank globally and operates the biggest branch network in Saudi Arabia. At end-2008, it had a network of 451 branches and 8,299 employees. The bank commenced operations in Malaysia through a wholly-owned Islamic banking subsidiary in late 2006.