The London based international rating agency, Fitch Ratings, upgraded Jordan-based Arab Bank’s long-term rating from BBB+ to A-, affirmed Arab Bank’s other ratings at (F2) for short-term and (B) for individual.
Fitch said the upgrade “reflects improved growth potential for the bank following a substantial rights issue in January 2006, and in the context of favourable economic conditions across most of the bank’s core Middle East markets.”
“Although Arab Bank has adopted a more dynamic growth strategy, its management has confirmed it will maintain its hitherto conservative attitude towards risk management and balance sheet liquidity,” it added. The Fitch announcement stressed that this approach has helped the bank to weather difficult operating conditions in the past, as has the diversified nature of its activities.
Arab Bank Chairman and CEO Abdel Hamid Shoman described the upgrade as the “crowning of years of hard work and dedication.”
Shoman said raising Arab Bank’s rating “reflects confidence in the positioning and performance of Arab Bank, as well as in what Arab Bank stands for.” He added that “the effective implementation of the Bank’s business strategy by its various lines of business has contributed to this and other successes.”
Fitch stressed that Arab Bank’s rights issue added US $1,525 million to its capital, representing a 63% increase on end-2005 equity. Martin Oldham, a Director in Fitch’s Financial Institutions Group said “the larger capital base strengthens Arab Bank’s competitive position and makes it better placed to exploit opportunities.”
“The capital increase”, Fitch said, “makes Arab Bank Group the largest banking group by equity in the Arab world.”