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
