RATINGS - Capital Intelligence affirms AlBaraka Islamic Bank's ratings

Capital Intelligence (CI), the international credit rating agency, announced that it has affirmed Bahrain-based AlBaraka Islamic Bank (AIB)'s Foreign Currency Long and Short-term ratings at BB+ and A3 respectively. The Bank's Financial Strength Rating was also maintained at BB in view of the moderate improvement in asset quality and profitability in the first nine months of 2010, notwithstanding ongoing challenges associated with building profitability to a solid footing. The Support Level of 2 reflects AIB's strong ownership through its parent AlBaraka Banking Group in Bahrain. The Outlook for the ratings is Stable.


While the recent merger of AIB's Pakistan operation with Emirates Global Islamic Bank in Pakistan has increased geographic exposure to Pakistan, it is noteworthy that the bulk of AIB's asset quality problems have historically related to the Bahrain operation. That said, AIB's exposure in Pakistan poses a comparatively high level of credit risk within the context of sovereign risk factors and the country's challenging operating environment. Emirates Global Islamic Bank is a small bank (total assets $175m) set up in Pakistan in 2007 by UAE and Saudi investors.

AIB reported total assets of just over $1bn at end September 2010. Its principal activities include the provision of Shari'a compliant demand and investment accounts (with respect to the latter the Bank shares profits as skill/expertise provider or agency (for a fee); finance and investment on the basis of Murabaha (cost plus profit margin), Mudaraba (the Bank shares profits as capital provider), Musharaka (participation investment) and Ijara.

Source : http://www.ameinfo.com/251136.html - Dec 11, 2010