Standard & Poor's Ratings Services (S&P) has recently affirmed Gulf International Bank's (GIB) long-term and short-term counterparty credit ratings at BBB+ and A-2 respectively. The agency has also affirmed the ratings outlook as stable.
S&P said in its report that the ratings on GIB reflect its "very strong" capital and earnings, and "strong" liquidity. The rating criteria also took into consideration the Bank's "adequate" risk position and "moderate" business position.
The agency explained that its assessment of GIB's capital and earnings as "very strong" reflects the Bank's very robust capitalization. S&P commented that GIB's risk-adjusted capital ratio before adjustments is expected to stay above 15% in the next 18 to 24 months. GIB's "strong" liquidity is another mitigating factor, S&P stated. S&P noted that "on June 30, 2011, a high 38% of its assets were in the form of cash and short-term bank placements."
Moreover, S&P considered "GIB's risk position to be "adequate," taking into consideration its more granular loan book compared with peers', as well as the generally lower-risk profile of its borrowers.... GIB's limited exposure compared with peers' to the riskier real estate and construction sectors is well secured by good quality collateral and conservative provisioning."
The agency also stated that GIB is one of the most efficient GCC banks, noting that "Its ratio of non-interest expenses to total assets averaged 0.6% over the past three years". It added that GIB "is implementing a new business plan involving the start-up of a retail bank across the Gulf but initially operating in Saudi Arabia. This is important for GIB's business model because it provides comfort to counterparties dealing with GIB."
Finally, S&P explained that GIB's Stable outlook "balances our opinion of the Bank's strong capitalization and shareholder support.... The outlook also factors in our expectation that GIB will likely maintain its asset quality and liquidity ratios at the current adequate levels."
Dr. Yahya A. Alyahya, GIB's Chief Executive Officer, commented: "We are very pleased with the ratings affirmation by S&P, and we view it as an endorsement of the actions taken by the Bank and its shareholders to address the challenges created by the changes in the operating environment for financial institutions."
He emphasized that "GIB's strong ownership structure, its exceptionally strong capitalization and efficiency, and improved liquidity levels have led to the ratings affirmation, which also reflect the Bank's commitment to continue to strengthen its franchise in the GCC."
GIB is a leading bank in the Middle East with its principal focus on the GCC states. Its primary shareholder is the Public Investment Fund of Saudi Arabia. The Bank provides client-focused, innovative financial products and services to a wide customer base in the region, including asset management,, IPOs, private equity placement, mergers & acquisitions, Sukuk/bond issues and Sharia-compliant banking services.
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For further information, please contact Mr. Abdulla Naneesh, Corporate Communications, Kingdom of Bahrain. Tel +973 17 522680 Fax +973 17 522656.
© Press Release 2012
