S&P: Banque Saudi Fransi assigned 'A/A-1' Ratings; outlook stable

"The ratings reflect BSF's adequate market position and risk profile, strong profitability, and sound capitalization," said Standard & Poor's credit analyst Emmanuel Volland.

The long-term rating also includes a one-notch uplift from the stand-alone rating, as Standard & Poor's believes that extraordinary support from the interventionist Saudi government--if needed--would be likely. The ratings are constrained by the bank's limited geographical diversification, concentration risks, and increasing competition in the Saudi banking market.

With Saudi riyal (SR) 73.6 billion ($19.6 billion) of assets at March 31, 2006, BSF is a significant player in the Saudi banking system.

"We expect that BSF will ably protect its market position and maintain its strong financial performance," added Mr. Volland. "The ratings are, however, constrained by structural weaknesses in the Saudi economy."

Significant and sustained improvements in economic diversification and liberalization, which would reduce concentration risks, and a stronger credit culture among domestic corporate borrowers could prompt an upgrade of BSF. On the downside, the ratings could come under pressure if BSF's appetite for risk increases, quality of earnings declines, and capitalization or asset quality deteriorate materially.