MANAMA: Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Bank ABC Islamic (ABCI) at A-/A2 (Single A Minus/A Two) on the international scale and at A+(bh)/A1(bh) (Single A Plus/A One) on the national scale, with a stable outlook.
In a statement, IIRA said in its assessment the bank’s overall fiduciary score lies in the range of 76-80, which represents strong fiduciary standards with a well-developed governance structure, wherein the rights of various stakeholders are considered to be well-protected.
The ratings primarily reflect the bank’s ability to consistently improve profitability and maintain asset quality indicators amidst tough macroeconomic environment in its core markets, particularly in the GCC.
The bank has been able to build up its business portfolio, without any new incidence of impairment over the last couple of years, said the rating agency.
However, fiscal pressure in ABCI’s core market economies has intensified, owing to the still subdued oil prices.
IIRA said under the circumstances, there is likelihood of a potential financial stress scenario in ABCI’s key end markets, which may challenge future growth and income generation potential.
Nevertheless, sound capitalisation levels provide it enough headroom against the current economic challenges.
Liquidity remains also adequate with ABCI’s increasing role in sukuk activities and investments.
In addition, the ratings are also driven by the ongoing financial and operational support from its parent in terms of providing a stable funding source and operational synergies.
Incorporated in Bahrain, ABCI operates as an Islamic wholesale banking arm of its parent Bank ABC, a conventional wholesale bank with a diversified franchise spread across 17 locations globally.
Corporate and Sharia governance practices at ABCI continue to derive strength from the regulatory guidance and strong self-regulatory infrastructure, with no departure from Sharia guidance noted in the last three years.