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IIRA Reaffirms Ratings of ABC Islamic, Bahrain

IM Press Release
By IM Press Release
3 months ago
IIRA Reaffirms Ratings of ABC Islamic, Bahrain


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  1. IIRA Reaffirms Ratings of ABC Islamic , Bahrain Manama, January 27, 2022 – Islamic International Rating Agency (IIRA) has maintained ratings of ABC Islamic (‘‘ABCI’’) at A+(bh)/A1(bh) (bh)/A1(bh) on the national scale and A-/A2 on the international scale. scale With diversification, IIRA sustained capital adequacy, ready access to liquidity as needed and geographical diversification does not expect material deterioration to the bank’s risk profile or long-term long rm business prospects. As such, ABCI rating outlook has been maintained at ‘Stable’. While profitability had been affected by falling business volumes and continuing margin contraction in 2021, we expect full year profitability to mark improvement from prior year, year driven by lower charge-offs. IIRA is sanguine about resurgence in business activity in much of ABCI core markets in 2022, partly driven by continued revival in the global economy, and bullish oil prices set to benefit the region region. As such, growth may be expected to pick up, up indicating possibility of a turnaround turnaround, in terms of the Bank’s business volumes. non-performing assets at Asset quality of ABCI has remained sound at end-September 2021 with net non ortfolio shift towards sovereigns continues, reducing below 0.2%, given substantial allowance set aside. Portfolio overall risk of the portfolio. While there is some risk of non-performance non performance emerging following the close of gnificant percentage of forbearance to total CBB forbearance measures, it is largely mitigated by the insignificant portfolio, the high quality of investments and financings exposures, with a large proportion invested in low risk i.e. sovereigns and financial institutions’ institutions sector, and the business turnaround expected in the bank’s key markets. Primarily due to declining exposures as well as a shift in portfolio composition in 2021, and the adoption of AAOIFI’s FAS 31 accounting standard in 2020, which allows for capital relief on wakala based structures, capital adequacy acy has trended up continuously over the last few reporting periods. At 43.2% as of end Q3’21, it remains significantly above minimum requirements. Liquidity risk is low, given the nature of funding obtained and ease of access to Group funds as needed for deployment. IIRA takes note that the bank has been able to maintain its risk profile in a globally heightened risk environment, which supports ratings assigned.. The ratings also derive strength from majority ownership of ABC B.S.C. (“ABC” Group”) given the ABC” or “the Group”), Group’s financial strength and willingness to extend support, as and when required. The Bank is oversi expected to continue to benefit from the Group as the primary source of funds, and the oversight and controls exercised. The Group’s global network also presents opportunities for the Bank in Islamic banking, within host jurisdictions of the Group’s subsidiaries and offices. ”, denoting strong fiduciary IIRA reaffirmed the Bank’s overall fiduciary score in the range of “76 “7 - 80”, standards. ABCI is in compliance with CBB’s corporate governance requirements with few exceptions, exceptions whereby CBB has provided exemptions. The Bank’s ank’s financial reporting and public disclosures are audi or verify the The information contained herein is obtained by IIRA from sources believed to be accurate and reliable. IIRA does not audit truth or accuracy of any such information. As a result, the information herein is provided "as is" without any representation or warranty of any kind. IIRA, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s) / score(s) mentioned. Rating is an opinion and not a warranty of a rated entity's current or future ability to meet contractual obligations, nor is it a recommendation to buy, sell or hold any security. sec
  2. indicative of a high level off transparency , in the context of global reporting standards. Ongoing developments in terms of regulatory guidelines are reflected in the Bank’s policy framework through periodic updates. For further information on this rating announcement, please contact us at iira@iirating.com audi or verify the The information contained herein is obtained by IIRA from sources believed to be accurate and reliable. IIRA does not audit truth or accuracy of any such information. As a result, the information herein is provided "as is" without any representation or warranty of any kind. IIRA, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s) / score(s) mentioned. Rating is an opinion and not a warranty of a rated entity's current or future ability to meet contractual obligations, nor is it a recommendation to buy, sell or hold any security. sec