MANAMA: Bahrain-based international Islamic banking major, Al-Baraka Banking Group (ABG), has been resilient to the political turmoil from early this year in the countries in which it operates, according to Standard & Poor's Ratings Services.
"We believe that political and economic tensions are easing in countries where Al-Baraka Banking Group operates, and that the group has shown resilience in the impaired operating environment caused by the tensions," an S&P statement said.(source)
"We are affirming our 'BBB-/A-3' ratings on Al-Baraka Banking Group and removing them from CreditWatch negative. The negative outlook reflects the likelihood that the group's operating environment will, over time, tarnish its financial profile and that its ambitious growth strategy could weaken its already moderate capitalization," it added.
S&P affirmed its “BBB-/A-3” long and short-term counterparty credit ratings on ABG and removed them from CreditWatch, where they had been placed with negative implications on Feb. 22, 2011. The outlook is negative.
"The CreditWatch resolution and ratings affirmation reflect the easing of political and economic tensions compared with the first half of the year in countries where the ABG group operates, as well as its resilience to the impaired operating environment caused by those tensions. Positive rating factors include the group's strong brand recognition in Islamic banking, good funding and liquidity profile, very limited concentration within its financing portfolio, and adequate resilience of its asset quality and financial performance. However, we remain concerned because most of the countries in which the group operates are expected to remain under pressure due to heightened political and economic risk," S&P added.
However, S&P believe that the group's capitalization is on a negative trend.
ABG's main subsidiary, Albaraka Turk Katilim Bankasi AS (Albaraka Turk; BB/Negative/B), is following an ambitious growth strategy that is weakening capitalization and could lead to asset quality deterioration.
