Capital Intelligence

CI: Jordan Islamic Bank’s ratings affirmed on ‘Stable’ outlook

Capital Intelligence (CI) has affirmed Jordan Islamic Bank’s (JIB) Long- and Short-Term Foreign Currency Ratings (FCRs) at ‘BB-’ and ‘B’, respectively. JIB’s FCRs are constrained by Jordan's sovereign ratings (‘BB-’/’B’/ ‘Stable’), reflecting JIB’s base of operations in Jordan and its exposure to the Jordanian sovereign in the form of balances at the Central Bank of Jordan (CBJ). The Support Level of ‘3’ is affirmed, on the basis of the high likelihood of support from the CBJ in case of need, and from the parent Al-Baraka Banking Group in Bahrain. The Outlook for JIB’s FCRs remains ‘Stable’, in line with the Outlook for Jordan’s Sovereign FCRs. The Bank’s Financial Strength Rating (FSR) is maintained at ‘BBB-’, on a ‘Stable’ Outlook.

Al Baraka Islamic Bank’s foreign currency ratings lowered

Capital Intelligence (CI) said that following the recent downgrade in the Kingdom of Bahrain’s Sovereign Ratings in September 2015, it has lowered Bahrain-based Al Baraka Islamic Bank’s (AIB) Long and Short-Term Foreign Currency Ratings to ‘BB’ and ‘B’, respectively (from ‘BB+’/‘A3’/‘Stable’). Accordingly, the Outlook for these ratings is revised to ‘Stable’ from ‘Negative’. The Support Level of ‘2’ is maintained on the grounds of the high likelihood of support from the parent ‘Al Baraka Banking Group’ (ABG), also in Bahrain.

CI: Al Baraka Islamic Bank’s ratings affirmed

Capital Intelligence (CI) announced today that it has affirmed Bahrain-based Al Baraka Islamic Bank’s (AIB) Financial Strength Rating (FSR) at ‘BB’, on ‘Stable’ Outlook, supported by its strong ownership, comfortable liquidity premised on customer deposit funding, and the improvement in the capital adequacy ratio (CAR). The FSR remains constrained by sovereign risk exposure in Pakistan (through ‘AlBaraka Bank Pakistan’), where economic conditions remain difficult despite some improvement, and a relatively high non-performing financings (NPFs) ratio and low loss-reserve cover. Also constraining the FSR is the Bank’s ongoing very weak profitability at both the operating and net levels. AIB’s Long and Short-Term Foreign Currency Ratings are maintained at ‘BB+’ and ‘A3’, respectively.

Tadhamon International Islamic Bank - Ratings Downgraded

Capital Intelligence (CI) has downgraded the ratings of Tadhamon International Islamic Bank's (TIIB), based in Sana'a, Yemen. TIIB's Financial Strength Rating (FSR) is downgraded to 'B' from 'B', and the Outlook for the FSR is downgraded to 'Negative'. The Outlook for TIIB's Foreign Currency Ratings, which are affirmed at 'C' Long-Term and 'C' Short-Term, are downgraded to 'Negative' as is the case with all CI-rated Yemeni banks, reflecting the current turmoil and severe economic weakness. The Support Rating is maintained at '4', reflecting the limited capacity of support. Non-performing loans (NPLs) and assets are expected to rise, which will require additional provisioning, thereby hitting profitability.

Capital Intelligence Raises the Ratings of Gulf Finance House B.S.C.

Capital Intelligence (CI), has raised Gulf Finance House's (GFH) Long-Term Rating to 'BB' from 'BB-' and affirmed the Short-Term Rating at 'B'. The Outlook for GFH's ratings reverts to 'Stable' from 'Positive' following the rating action. The ratings reflect the recent successful refinancing and resultant extended debt repayment period. Also supporting the ratings is the significant reduction in leverage in recent years and the moderately improved liquidity position. The factors constraining GFH's ratings are the forced debt restructuring a few years ago, an encumbered asset base, and the small balance sheet coupled with single name and sector concentrations. Also constraining the ratings is the still challenging investment environment.

Kuwait Finance House ratings affirmed by Capital Intelligence

Capital Intelligence (CI) has announced that it has affirmed the Financial Strength Rating (FSR) of Kuwait Finance House (KFH) of 'BBB+'. The rating is supported by KFH's dominance of the Islamic banking sector in Kuwait, as well as its large overall market share in both deposits and loans, and by the significantly improved equity base following the June 2013 rights issue. The rating is constrained by a less than satisfactory asset quality in terms of headline non-performing facility ratio and reserve coverage, and by poor profitability at the net level. Looking ahead, the growing international component of both revenues and balance sheet is likely to eventually become a supporting factor.

Capital Intelligence assigns Ratings to Gulf Finance House B.S.C.

Capital Intelligence (CI) has assigned Gulf Finance House (GFH) Long and Short-Term Ratings of 'BB-' and 'B', respectively. The ratings are supported by a significant reduction in leverage as a result of debt repayment and increases in equity, the successful restructuring of debt with an extended repayment period, and the return to profitability in 2012. The factors currently constraining the ratings are the forced debt restructuring in 2012, tight liquidity (although this improved in H1 2013), an encumbered asset base, a small balance sheet coupled with single name and sector concentrations in the asset base, reliance on deal flow for income generation, and the still challenging investment environment.In view of the improvement in both liquidity and leverage in H1 2013, a 'Positive' Outlook is assigned to the ratings.

Sharjah Islamic Bank's ratings affirmed with 'stable' outlooks

Capital Intelligence (CI) has maintained Sharjah Islamic Bank's (SIB) Financial Strength Rating (FSR) at 'BBB+', with SIB's exceptionally sound capital adequacy ratio (CAR) and good liquidity being major supporting factors. Rising non-performing Islamic financing facilities (NPIFFs), a low coverage ratio and high customer concentrations are major constraining factors. While profitability had been under some strain in the recent past, the Bank's good Q1 2013 operating performance is a favourable development. A 'Stable' Outlook is appended to the FSR on the expectation that some of the impaired IFFs will move off the non-performing list later this year, and that the coverage ratio will improve. However, if ratios remain unchanged or worsen, the FSR could be further adjusted downwards at the next review. The Foreign Currency Ratings are affirmed at 'A-' Long-Term and 'A2' Short-Term with a 'Stable' Outlook.

Ratings of Bank AlJazira affirmed

Capital Intelligence (CI) has affirmed the ratings of Saudi Bank ALJazira (BAJ). The Financial Strength Rating (FSR) is affirmed at 'BBB', supported by sound liquidity, strong customer deposit growth and improved profitability. For the same reasons, the Long-Term Foreign Currency Rating (FCR) is affirmed at 'BBB+' and the Short-Term Foreign Currency Rating at 'A2'. Ratings are constrained by the high non-performing loan (NPL) ratio, the high cost structure and a resultant low profitability, and a high level of deposit concentration. Both the FSR and the FCR continue to carry a 'Stable' Outlook. In light of the Bank's position in the Saudi banking sector, official financial support is expected to be forthcoming in the event it is needed. Consequently, the Support Level remains at '2'.

Tadhamon International Islamic Bank downgraded by CI

The Financial Strength Rating of Tadhamon International Islamic Bank (TIIB) has been downgraded to 'b+' from 'BB-' by Capital Intelligence (CI). The downward change of the rating reflects the deterioration in TIIB's financial profile. The ratings of TIIB's Long- and Short-Term Foreign Currency are 'b-' and 'c' respectively. Weakening asset quality and a subsequent large provision charge were the reason why the bank recorded a loss last year.

Capital Intelligence reaffirms the rating of NIG Sukuk Company

Capital Intelligence has reaffirmed the rating of NIG Mudaraba Sukuk at 'BBB-', even though the company's performance in past two years continues to be weak. The company is struggling due to pressure by high financing costs of its large debt and a persistently weak stock market.

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