Riyadh – Mubasher: Fitch Ratings on Wednesday downgraded the long-term issuer default ratings (LT IDRs) of seven Saudi banks, namely: Al Rajhi Bank (ARB), National Commercial Bank (NCB), Riyad Bank (RB), Samba Financial Group, Saudi British Bank (SABB), Banque Saudi Fransi (BSF) and Arab National Bank (ANB).
On the other hand, it revised the outlooks for Saudi Hollandi Bank (SHB), Saudi Investment Bank (SAIB), Alinma Bank and Bank Aljazira (BAJ) to negative from stable, while affirming their ratings, it said in a statement.
Fitch added “The outlooks on the other banks' IDRs are also negative.”
These ratings actions follow the agency’s downgrade of Saudi Arabia earlier in April to 'AA-' from 'AA', maintaining its negative outlook.
The IDRs of ARB, NCB, RB and Samba are at the “same level as the Saudi Banks D-SIB support rating floor (SRF) and their downgrade to 'A' from 'A+' is driven by the downward revision of their D-SIB SRF to 'A' from 'A+' following the downgrade by one notch of the Saudi sovereign. The Negative Outlook for these four banks mirrors that of the sovereign,” Fitch noted.
Viability ratings (VR) for the four banks have also been downgraded to 'a-' from 'a', noting the deterioration in the Saudi operating environment, Fitch said, adding that this deterioration is likely to negatively pressure the banks' credit profiles.
As for SABB, BSF and ANB, Fitch downgraded their LT IDRs to 'A-' from 'A', while its rating for the short-term IDRs to 'F2' from 'F1' reflects the downgrade of the banks' VRs to 'a-' from 'a' along with a negative outlook reflects the deterioration in the Saudi operating environment.
Finally, the revision of the outlooks of SHB, SAIB, Alinma and BAJ to negative highlights Fitch's view “that it is now appropriate to have these banks' Long-term IDRs one notch below the Saudi Banks D-SIB SRF of 'A' at 'A-'.”
