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Rating Action:

Moody's Assigns National Scale Ratings to four Saudi Banks

 The document has been translated in other languages

07 Oct 2020

Limassol, October 07, 2020 -- Moody's Investors Service, ("Moody's") has today assigned National Scale Ratings (NSRs) for the long- and short-term deposit ratings as well as the long- and short-term Counterparty Risk Ratings (CRRs) of four Saudi banks. These banks are Bank Al-Jazira (Baa1 negative, baa3), Riyad Bank (A2 negative, baa1), Samba Financial Group (A1 negative, a2) and Saudi British Bank (A1 negative, a3). A full list of assigned ratings is available at the end of this press release.

This rating action follows the publication of new national scale rating map for the government of Saudi Arabia on 2 October 2020. For more details of the new NSR maps, please see "National Scale Ratings Maps by Country" (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_190456).

NSRs provide a measure of relative creditworthiness within a single country, and are derived from global scale ratings (GSRs) using country-specific maps. NSRs are not intended to rank credits across multiple countries; instead they provide a measure of relative creditworthiness within a single country (Saudi Arabia in this case). Moody's NSRs are given a two-letter suffix to distinguish them from the agency's Global Scale Ratings. For example, NSRs in Saudi Arabia have the country abbreviation "sa".

RATINGS RATIONALE

The rationale and key drivers are presented on a bank by bank basis below.

BANK AL-JAZIRA (BAJ)

Moody's assigned A3.sa/SA-2 national scale deposit ratings and A2.sa/SA-1 national scale CRRs to BAJ. These ratings are underpinned by the bank's standalone Baseline Credit Assessment (BCA) of baa3 and two notch of government support uplift, which results in a global scale long-term deposit rating of Baa1. The A3.sa is the higher of two NSR categories corresponding to the bank's local currency deposit global scale rating.

BAJ's A3.sa NSR deposit rating reflects the bank's small but growing Islamic banking franchise, improved capitalisation and sound liquidity and funding. These strengths are moderated by pressures on the bank's solvency in the next two years on the back of lower oil prices, reduced government spending and the coronavirus-induced disruption.

RIYAD BANK

Moody's assigned Aa2.sa/SA-1 national scale deposit ratings and Aa1.sa/SA-1 national scale CRRs to Riyad Bank. These ratings are underpinned by the bank's global scale long-term deposit rating of A2, which in turn reflects a standalone BCA of baa1 and two notches of government support uplift. The Aa2.sa is the higher of two NSR categories corresponding to the bank's local currency deposit global scale rating.

Riyad Bank's Aa2.sa NSR deposit rating captures its strong capital base, stable deposit-based funding; and resilient profitability, supported by the bank's solid franchise in multiple business lines. These strengths are moderated by the high asset-quality risks we expect in the next two years on the back of lower oil prices, reduced government spending and the coronavirus induced disruption.

SAMBA FINANCIAL GROUP (SAMBA)

Moody's assigned Aa1.sa/SA-1 national scale deposit ratings and Aa1.sa/SA-1 national scale CRRs to Samba. These ratings are underpinned by the bank's global scale long-term deposit rating of A1, which in turn reflects a standalone BCA of a2 and one notch of government support uplift. The Aa1.sa is the second highest NSR that can be achieved by any entity in Saudi Arabia and the highest currently assigned to any bank.

Samba's Aa1.sa NSR deposit rating captures its solid funding and liquidity; and strong solvency, with high capital buffers and solid profitability. These strengths are moderated by risks to its asset quality and profitability on the back of lower oil prices, reduced government spending and the coronavirus-induced disruption.

SAUDI BRITISH BANK (SABB)

Moody's assigned Aa1.sa/SA-1 national scale deposit ratings and Aa1.sa/SA-1 national scale CRRs to SABB. These ratings are underpinned by the bank's standalone BCA of a3 and two notch of government support uplift, which results in a global scale long-term deposit rating of A1. The Aa1.sa is the second highest NSR that can be achieved by any entity in Saudi Arabia and the highest currently assigned to any bank.

SABB's Aa1.sa NSR deposit rating reflects the bank's stable funding and sound liquidity, solid profitability and efficiency as well as strong capitalisation. These strengths are moderated by pressures on the bank's solvency in the next two years on the back of lower oil prices, reduced government spending and the coronavirus-induced disruption.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

NSRs for the four Saudi banks will face upward or downward pressure if their corresponding GSRs are upgraded or downgraded, unless this is in conjunction with a recalibration of the national scale with an offsetting impact on NSRs.

LIST OF AFFECTED RATINGS

Issuer: Bank Al-Jazira

..Assignments:

....Long-term Counterparty Risk Rating, assigned A2.sa

....Short-term Counterparty Risk Rating, assigned SA-1

....Long-term Bank Deposits, assigned A3.sa

....Short-term Bank Deposits, assigned SA-2

Issuer: Riyad Bank

..Assignments:

....Long-term Counterparty Risk Rating, assigned Aa1.sa

....Short-term Counterparty Risk Rating, assigned SA-1

....Long-term Bank Deposits, assigned Aa2.sa

....Short-term Bank Deposits, assigned SA-1

Issuer: Samba Financial Group

..Assignments:

....Long-term Counterparty Risk Rating, assigned Aa1.sa

....Short-term Counterparty Risk Rating, assigned SA-1

....Long-term Bank Deposits, assigned Aa1.sa

....Short-term Bank Deposits, assigned SA-1

Issuer: Saudi British Bank

..Assignments:

....Long-term Counterparty Risk Rating, assigned Aa1.sa

....Short-term Counterparty Risk Rating, assigned SA-1

....Long-term Bank Deposits, assigned Aa1.sa

....Short-term Bank Deposits, assigned SA-1

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.

The local market analyst for Bank Al-Jazira and Saudi British Bank ratings is Ashraf Madani, +971 (423) 795-42.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Christos Theofilou, CFA
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
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