The operating environment in Saudi Arabia remains a rating constraint for all banks, although recent firmness in oil prices should provide some relief.
Capital Intelligence Ratings (CI) affirmed its ‘A’ financial strength ratings for Saudi British Bank (SABB).
The bank’s ratings are supported by very strong capitalisation metrics, good and enhanced liquidity, sound asset quality, despite some weakening, and solid profitability at both the operating and net levels.
The financial strength ratings are constrained by the lack of disclosure on concentrations by both borrower and depositor and lack of disclosure as to the make-up of the substantial non-rated portion of the investment portfolio.
SABB benefits from a credit culture which includes the use of many of the systems and controls of its strategic shareholder, HSBC, which continues to support the Bank through a long-standing technical services agreement.
Counteracting a fractional decline in customer deposits which was seen elsewhere in the sector in the past two years was the bank's strong capital profile and the reduction in its loan portfolio, said CI.
Overall liquidity is sound and in fact improved in 2017.
At year-end 2017 SABB's assets totalled SAR 187.6 billion ($50billion), representing a market share of 8 per cent by total assets.
SABB is one of four banks in the kingdom with significant foreign ownership.