Arab National Bank financial rating positive

Moody's Investors Service has changed the outlook of the Saudi Arab National Bank from a stable D+ to a positive financial strength rating.

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By  Massoud Derhally Published  September 22, 2002

Moody's Investors Service has changed the outlook of the Saudi Arab National Bank from a stable D+ to a positive financial strength rating.

The bank's foreign currency deposit ratings remain unchanged at the Baa3/Prime-3 country ceiling and have positive outlook.

Moody's said that the improvement in outlook reflects ANB's strengthening franchise and financial condition. As a result of the strategic re-focus and operational re-engineering, Moody's explained, ANB has become a more dynamic player on the Saudi Arabian banking scene.

The agency views positively the steps taken by ANB to adopt a more proactive business approach, sharpen its customer focus and broaden its range of products and services. The bank remains well capitalised, and has tightened its credit risk management and built up comfortable provision reserves.

Moody's said that it expects these operational improvements to enable the bank to grow its franchise in the Kingdom, making it more defensible against competition, and to support the on-going enhancements in its financial results, so as to bring ANB closer to the better performers in the market.

Profitability ratios should improve further as the bank grows its non-interest income and as provisioning requirements abate.

However, Moody's noted, it expects operating costs to remain a burden on the bank's efficiency ratios for the next 2-3 years as ANB makes further investments in its IT and branch infrastructure.

ANB's total assets were SAR 41.9bn ($ 11.2bn) as of 30 June 2002. The bank’s net profit for the first six months of 2002 increased by 29% over the corresponding period of last year to reach SR 302 million. Gross income from operations was up by 15% to SR 854 million and total operating expense increased by 8% to SR 553 million.

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