Moody’s affirms ratings of nine Saudi Arabian banks and changes outlook to stable

Move driven by the lenders’ resilient performance, rating agency says

The exterior of Banque Saudi Fransi in Riyadh. Waseem Obaidi / The National

Moody's Investors Service affirmed the long-term ratings of nine banks in Saudi Arabia and changed the outlook to stable from negative, saying its move was primarily driven by the lenders’ resilient performance and the expectation that the government’s capacity to support them will remain unchanged.

Moody's said it affirmed the banks’ long-term deposit ratings as well as the senior unsecured and subordinated debt ratings of their affiliated entities. The banks include Saudi National Bank, Al Rajhi Bank, Riyad Bank, Banque Saudi Fransi, Arab National Bank, Bank AlBilad, The Saudi Investment Bank, Bank Al-Jazira and Gulf International Bank – Saudi Arabia.

The rating agency also affirmed the Baseline Credit Assessments (BCAs), Adjusted BCAs, Counterparty Risk Assessments (CRAs) and Counterparty Risk Ratings (CRRs) of the nine banks it rated in Saudi Arabia.

Moody's said its decision to affirm the ratings of the nine banks reflects the resilience in their financial performance, despite continuing pressure from the pandemic.

“The banks have managed to maintain strong asset quality and capital buffers and their liquidity buffers remain solid,” Moody’s said in a statement on Tuesday.

The Saudi banking system's average non-performing loan ratio stood at 2.4 per cent as of June 2021 and capital buffers as measured by tangible common equity to risk-weighted assets stood at 16.4 per cent, according to Moody’s.

“The affirmation of the ratings for all banks also captures the agency's expectation that the high or very high probability of government support for banks at times of stress remains intact following the affirmation of the sovereign rating and outlook change to stable from negative,” it said.