Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed the Financial Strength Rating (FSR) and the Foreign Currency (FC) Ratings of Riyad Bank (RB), based in Riyadh, Saudi Arabia. Supported by its consistently strong capital profile, robust growth in customer deposits and the composition of those deposits, consequently improved liquidity, together with growing operating profitability, the Bank’s FSR is affirmed at ‘AA-’, with a ‘Stable’ Outlook.
The rating is constrained by the high non-performing loan net accretion rate and the large stock of past due not impaired loans, both of which negatively impact asset quality and net profitability, and by the softening economy, which could lead to further deterioration in asset quality. Also constraining the rating to some extent is the level of related-party exposure.
For the same reasons, the Long-Term FC Rating is maintained at ‘AA-’ and the Short-Term FC Rating at ‘A1+’, both constrained by the ratings assigned to the sovereign. Because of the recent change in the Sovereign Ratings of the Kingdom of Saudi Arabia – a change in the Outlook from ‘Stable’ to ‘Negative’ – the Outlook for RB’s FC Ratings is also changed from ‘Stable’ to ‘Negative’. In view of the Bank’s prominent position in the Saudi banking sector, official support is expected to be forthcoming in the unlikely event it is needed. Consequently, the Support Level remains at ‘2.’
At year end 2014, RB ranked fourth of twelve locally incorporated banks in the Kingdom, both by total assets and by total capital. On that date, its assets totalled SAR214.6 billion (equivalent to USD57.2 billion), representing a market share of 10.4% by total assets. At year end 2014, the Bank operated a network of 318 domestic branches (a significant increase over the 252 at year end 2013) and over 2,500 ATMs.