Limassol, December 10, 2020 -- Moody's Investors Service ("Moody's") has today
upgraded the long-term foreign currency deposit ratings of 29 banks
and the long-term foreign currency issuer rating of one bank across
five countries: Bahrain, Oman, Jordan, Pakistan
and Turkey. Moody's has also downgraded the long-term
foreign currency Counterparty Risk Rating of one bank in Oman.
The rating actions are driven by changes in the local currency (LC) and
foreign currency (FC) country ceilings applied to the jurisdictions of
the banks following the publication of Moody's updated Country Ceilings
Methodology on 7 December 2020. This methodology is available at
this link: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1225594.
Today's rating actions cover: (1) Bahrain Islamic Bank B.S.C.,
(2) National Bank of Bahrain BSC, (3) BBK B.S.C.,
(4) Bank Muscat SAOG, (5) HSBC Bank Oman SAOG (HBON), (6)
National Bank of Oman SAOG, (7) Oman Arab Bank S.A.O.G,
(8) Bank Dhofar SAOG, (9) Sohar International Bank SAOG, (10)
Bank Nizwa SAOG, (11) Arab Bank PLC, (12) Cairo Amman Bank
(CAB), (13) Housing Bank for Trade and Finance (The) (HBTF),
(14) Allied Bank Limited, (15) Habib Bank Ltd., (16)
MCB Bank Limited, (17) National Bank of Pakistan, (18) United
Bank Ltd., (19) T.C. Ziraat Bankasi A.S.,
(20) Turkiye Is Bankasi A.S., (21) Turkiye Garanti
Bankasi A.S., (22) Akbank T.A.S.,
(23) Turkiye Halk Bankasi A.S., (24) Yapi ve Kredi
Bankasi A.S., (25) Turkiye Vakiflar Bankasi T.A.O.,
(26) QNB Finansbank A.S., (27) Denizbank A.S.,
(28) Turk Ekonomi Bankasi A.S., (29) HSBC Bank A.S.
(Turkey) and (30) Alternatifbank A.S.
All other ratings and assessments of the banks are unaffected by today's
actions.
Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL436478
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and identifies each affected issuer.
RATINGS RATIONALE
Today's rating actions on 30 banks in Middle East, Pakistan
and Turkey are driven by changes in country ceilings under Moody's
updated country ceilings methodology. Country ceilings typically
indicate the highest rating level that would generally be assigned to
the financially strongest obligations of issuers domiciled in a country,
absent exceptional considerations such as external support from outside
the country.
The updated ceilings methodology has unified deposit ceilings with the
typically higher debt ceilings, whereby LC and FC country ceilings
are no longer distinguished between deposit and debt ceilings.
These changes reflect Moody's view that the risks that affect access
to bank deposits are not materially different from those that affect the
ability of banks and non-banks to service their debt obligations.
FOREIGN CURRENCY CEILINGS
As a result of the methodology change, FC ceilings as applied to
FC deposits were raised in Bahrain, Oman, Jordan, Pakistan
and Turkey, resulting in upgrades of long-term FC deposits
of 29 banks and the long-term FC issuer rating of one bank.
At the same time, FC ceilings applicable to debt obligations were
lowered in Oman, resulting in the downgrade of the long-term
FC Counterparty Risk Rating of HBON.
ELIMINATION OF OFFSHORE CEILINGS
Moody's has removed separate offshore FC ceilings in Bahrain.
The offshore business model has faced significant challenges in recent
years globally, in particular related to regulations surrounding
anti-money laundering and tax evasion, eroding in Moody's
view the distinctions that historically justified separate, higher
ceilings for offshore centres.
However, the ratings of Gulf International Bank BSC (GIB) are unaffected
by the change in the refreshed FC country ceilings for Bahrain.
This reflects the fact that the bank's support provider is the Government
of Saudi Arabia (A1 negative) where GIB also has most of its assets with
minimal exposure in Bahrain itself.
OUTLOOK
The outlooks on the long-term FC deposit ratings for 24 of the
30 banks affected by today's rating actions were maintained.
In addition, the outlook on the long-term FC issuer rating
for Bahrain Islamic Bank B.S.C. was also maintained.
At the same time, Moody's has assigned a stable outlook to
the long-term FC deposit ratings of five Pakistani banks:
Allied Bank Limited, Habib Bank Ltd., MCB Bank Limited,
National Bank of Pakistan and United Bank Ltd.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Bahrain
There is currently no upward pressure because the banks' long-term
deposit and issuer ratings -- where applicable - are currently
at the sovereign level. An upgrade of the government's rating
could result in an upgrade of these ratings.
Ratings could be downgraded if the agency witnesses one or combination
of the following (1) deterioration in the banks' solvency profile,
(2) continued pressure on the operating environment leading to lower macro
profile, and (3) a downgrade in the sovereign's rating.
Oman
Upwards pressure on the long-term deposit ratings of all Omani
banks (except HBON) is limited given their positioning at the same level
as the sovereign rating, as well as the negative outlook.
Upwards pressure on the long-term deposit ratings of HBON is limited
given their positioning above the sovereign rating, as well as the
negative outlook. A higher sovereign rating could lead to upwards
pressure on the ratings of Omani banks.
Downward pressure on the long-term deposit ratings of Omani banks
could develop through a deterioration in the sovereign's credit profile,
or a material deterioration in the banks' solvency and liquidity.
Jordan
There is currently limited upside to the banks' ratings. For Arab
Bank PLC, long-term LC deposit ratings are already two notches
above the sovereign rating, while for CAB and HBTF the long-term
LC deposit ratings are on par with the Government of Jordan reflecting
their closer linkage. Accordingly, any upgrade for the banks
would need to be preceded by a strengthening of the sovereign creditworthiness
and operating environment in Jordan and in key regional markets.
A rating downgrade could be a consequence of a weakening in the banks'
key operating environments, which would in turn lead Moody's to
expect a weakening in the banks' financial fundamentals, or a deterioration
in Jordan's sovereign creditworthiness. For Arab Bank PLC any increase
in the interconnectedness between its own balance sheet and the Jordanian
sovereign risk would also be credit negative.
Pakistan
Upward pressure on Pakistani banks' long-term deposit ratings
can result from improvements in the operating environment and the sovereign's
credit risk profile, combined with improvements in the bank's solvency
metrics and specifically their profitability, asset quality and
capital metrics.
Downward pressure on Pakistani banks' long-term deposit ratings
would develop following a downgrade of the sovereign rating, reflecting
the high interlinks between the banks' credit profile and that of the
government. Downward pressure on banks' BCAs could also develop
from a greater-than-expected deterioration in operating
conditions because of the spread of the pandemic, weakening the
banks' asset quality, profitability and capital metrics.
Turkey
An upgrade of the banks' long-term deposit ratings is unlikely,
given the current negative outlook. Moody's could change
the outlook to stable following a stabilisation of Turkey's sovereign
outlook, an improvement of the operating environment, which
would stabilise the banks' stock of problem loans and profitability,
and a further structural reduction of the banks' reliance on foreign
currency funding.
Conversely, Moody's could downgrade the banks' long-term
deposit and senior debt ratings -- where applicable - following
a downgrade of Turkey's sovereign debt rating, a further deterioration
in Turkey's operating environment, a higher-than-expected
deterioration of asset quality and profitability, or a material
decline in capital ratios.
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.
The local market analyst for Akbank T.A.S.,
Turkiye Vakiflar Bankasi T.A.O., Turk Ekonomi
Bankasi A.S., QNB Finansbank A.S.,
Denizbank A.S. and Alternatifbank A.S. ratings
is Nitish Bhojnagarwala, +971 (423) 795-63.
The local market analyst for Bank Dhofar SAOG, Bank Muscat SAOG,
Bank Nizwa SAOG, HSBC Bank Oman SAOG, National Bank of Oman
SAOG, Oman Arab Bank S.A.O.G and Sohar International
Bank SAOG ratings is Mik Kabeya, +971 (423) 795-90.
The local market analyst for Bahrain Islamic Bank B.S.C.,
National Bank of Bahrain BSC and BBK B.S.C. ratings
is Ashraf Madani, +971 (423) 795-42.
REGULATORY DISCLOSURES
The List of Affected Credit Ratings announced here are a mix of solicited
and unsolicited credit ratings. Additionally, the List of
Affected Credit Ratings includes additional disclosures that vary with
regard to some of the ratings. Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL436478
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
• Endorsement
• Rating Solicitation
• Issuer Participation
• Participation: Access to Management
• Participation: Access to Internal Documents
• Disclosure to Rated Entity
• Lead Analyst
• Releasing Office
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.
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.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
The person who approved Arab Bank PLC, Cairo Amman Bank, Housing
Bank for Trade and Finance (The), Allied Bank Limited, Habib
Bank Ltd., National Bank of Pakistan, MCB Bank Limited,
United Bank Ltd., Turkiye Halk Bankasi A.S.,
Turkiye Vakiflar Bankasi T.A.O., QNB Finansbank
A.S., Denizbank A.S., Turk Ekonomi
Bankasi A.S., HSBC Bank A.S. (Turkey),
Alternatifbank A.S., Bank Dhofar SAOG, Bank
Muscat SAOG, Bank Nizwa SAOG, HSBC Bank Oman SAOG, National
Bank of Oman SAOG, Oman Arab Bank S.A.O.G,
Sohar International Bank SAOG, Bahrain Islamic Bank B.S.C.,
National Bank of Bahrain BSC and BBK B.S.C. credit
ratings is Sean Marion, MD - Financial Institutions,
Financial Institutions Group, JOURNALISTS: 44 20 7772 5456,
Client Service: 44 20 7772 5454. The person who approved
T.C. Ziraat Bankasi A.S., Turkiye Is
Bankasi A.S., Turkiye Garanti Bankasi A.S.,
Akbank T.A.S. and Yapi ve Kredi Bankasi A.S.
credit ratings is Henry MacNevin, Associate Managing Director,
Financial Institutions Group, JOURNALISTS: 44 20 7772 5456,
Client Service: 44 20 7772 5454.
The relevant office for each credit rating is identified in "Debt/deal
box" on the Ratings tab in the Debt/Deal List section of each issuer/entity
page of the website.
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
Henry MacNevin
Associate Managing Director
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
