IIRA rates Bank ABC Islamic at A-/A2

Bahrain-based Islamic International Rating Agency (IIRA) has rated Bank ABC Islamic (ABCI) of Bahrain at A- /A2 (Single A Minus /A Two) on the international scale and at A+(bh) / A1(bh) (Single A Plus /A One) on the national scale, with a stable outlook. Corporate and shari'ah governance practices at ABCI continue to derive strength from regulatory guidance and strong self-regulatory infrastructure, with no departure from shari'ah guidance noted in the last three years, IIRA adds.

The ratings on ABCI primarily reflect the bank's ability to consistently improve its profitability and maintain its asset quality indicators amidst a tough macroeconomic environment in its core markets, particularly in the GCC. The bank has been able to build up its business portfolio without any new incidence of impairment over the last couple of years, IIRA notes. However, fiscal pressure in ABCI's core market economies has intensified due to subdued oil prices. A potential financial stress scenario in ABCI's key end markets could challenge the bank's future growth and income generation potential, the ratings agency says. 

On the plus side, the bank has sound capitalisation levels and adequate liquidity, especially with ABCI's increasing role in sukuk activities and investments. In addition, the bank's ratings are also driven by the ongoing financial and operational support from its parent Bank ABC Group in terms of providing a stable funding source and operational synergies, IIRA said. Bank ABC Group (Arab Banking Corporation) is one of the leading conventional wholesale banks in the MENA region with a diversified franchise spread across 17 locations globally.