The Islamic International Rating Agency (IIRA) has reaffirmed ratings assigned to ABC Islamic Bank (ABC Islamic) at A+/A-1 on the national scale and A-/A-2 on the international scale.
The national scale ratings denote our assessment of the bank’s ability to meet its obligations in a timely manner within the context of the domestic market and notwithstanding the sovereign risk elements. The international scale ratings provide an assessment of the bank’s credit worthiness while taking into account sovereign level risks. Outlook on the ratings is stable.
The overall Fiduciary Score has been assessed in the range of (76-80), which denotes ‘Strong Fiduciary Standards’. The fiduciary score is an aggregation of scores assigned to its three sub-sections, namely Corporate and Shariah Governance, and Asset Manager Quality.
The corporate governance segment of the Fiduciary scores has been enhanced on account of the bank having achieved a higher degree of compliance with the High Level Control Module of the Central Bank of Bahrain.
Enhanced independent representation on the Board of Directors and hence improved board committee composition is the most noteworthy element in this respect. The Sharia review process was thorough and no departures from the Sharia Supervisory Board’s pronouncements were reported. Transaction level review has been instituted to facilitate Sharia compliance.
ABC Islamic Bank has posted improving financial performance particularly in the first half of 2013. Moreover, certain non-performing accounts have been settled and higher quality new exposures have been taken, resulting in improved asset portfolio quality. Capital is sufficient for the foreseeable future and given the bank’s growth projections.
As a wholly owned subsidiary of the Arab Banking Corporation (ABC or ‘the parent bank’), ABC Islamic benefits from its parent’s strong regional franchise. ABC remains financially resilient and continues to extend operational support to its Islamic subsidiary. The considerable financial resources of the group add to our overall rating assessment of the bank.