Saudi Arabia-Based Al Rajhi Bank Upgraded To 'A+' On Strengthened Financial Profile

Press Release

Saudi Arabia-Based Al Rajhi Bank Upgraded To 'A+' On Strengthened Financial Profile;
Outlook Stable

*We consider that Al Rajhi Bank's strong market position in the Saudi retail market,
superior profitability, growth strategy with solid capital ratios, and improved risk
management have strengthened the bank's financial profile. *We are raising our
long-term rating on Al Rajhi Bank to 'A+' from 'A' and affirming our 'A-1'
short-term rating. *The stable outlook reflects our view that Al Rajhi Bank should
continue to benefit from its comparative advantage as a leading and well-entrenched
Islamic bank in Saudi Arabia and maintain superior financial performance and capital

PARIS (Standard & Poor's) May 31, 2010--Standard & Poor's Ratings Services said
today that it has raised to 'A+' from 'A' its long-term counterparty credit rating
on Saudi Arabia-based Al Rajhi Bank (ARB) and affirmed its 'A-1' short-term
counterparty credit rating. The outlook is stable.

"The rating action reflects our view that ARB's stand-alone credit profile has
strengthened in the recent past, thanks to its unique market position in the Saudi
retail market, increasingly diversified loan book, strong and resilient
profitability, and growth strategy with solid capital ratios," said Standard &
Poor's credit analyst Nicolas Hardy.

The ratings on ARB reflect its strong capitalization, resilient and superior
profitability, lower concentrations in loans and deposits than peers, and high
systemic importance stemming from its large domestic retail franchise. The ratings
are constrained by the bank's more difficult economic environment, low geographic
diversification, and increasing competitive pressure.

The long-term rating includes an uplift of one notch above the bank's stand-alone
credit profile. This reflects our view that the government of Saudi Arabia
(AA-/Stable/A-1+), which we consider as "interventionist" toward its banking sector,
would likely provide extraordinary support to ARB, a systemically important bank, in
case of need.

"The stable outlook reflects our expectation that ARB will retain its strong
financial profile and leading commercial position in retail banking, despite
increasing competition," said Mr. Hardy.

We see limited room for further upgrades over the medium term. We could raise the
ratings if the bank materially improves geographic and business diversification out
of its domestic retail segment, if it further widens the funding mix to reduce
maturity mismatches, and if the level of disclosure from key controlling
shareholders improves, in turn enabling us to better assess their financial

The ratings may come under pressure if asset quality or capitalization weakens


FI Criteria: Bank Rating Analysis Methodology Profile, March 18, 2004