(MENAFN Press) Capital Intelligence (CI), the international credit rating agency, announced today that it has affirmed Arab Jordan Investment Bank (AJIB)'s Long and Short-Term Foreign Currency Ratings at BB and B respectively. These ratings are set at the same level as CI's sovereign ratings for Jordan. In view of the high probability of support from the Jordanian authorities the Support factor '3' is maintained. The agency affirmed the Bank's BBB Financial Strength Rating (FSR) on the basis of its solid capital adequacy, high liquidity and better than sector average profitability. The FSR is constrained by loan and deposit concentrations, a further increase in non-performing loans (NPLs) and the challenging operating environment. The Outlook for all the ratings is Stable.
AJIB is a well managed institution and follows a clear business strategy. The Bank benefits from the demonstrated support of its core shareholders, whose key members are represented in the management and the board. The capital base has grown significantly over the past through a series of rights issues and retained earnings. The Bank's capital adequacy has been consistently solid and better than the sector average. The significant holdings of liquid and quasi-liquid assets coupled with the comparatively low share of loans in total assets underscores management's conservatism. Notwithstanding the further increase in NPLs during the first nine months of 2011, overall asset quality remained satisfactory. That said, the operating and economic environment in Jordan remains challenging and credit risks still relatively high. In that regard, AJIB's solid capital base in combination with its high liquidity is a major risk mitigant.
Aided by diversified sources of income, AJIB's profitability has remained better than the Jordanian industry average. While operating profit was boosted in the first nine months of 2011 by a capital gain, this was offset by a significant general provision charge which translated into flat net profit growth and an unchanged return on average assets.
Established in 1978, AJIB is focused on commercial banking and serves a base of corporate and high net worth customers including Jordanian government entities. It seeks to further develop private and retail banking thereby bringing diversification to risk assets, income and funding. The Bank's largest shareholder is the Al-Qadi family, which owns 40% of shares. Other shareholders include Sheikh Hamad Bin Jassin Bin Jaber Al-Thani (the current prime minister of Qatar and acting foreign minister, 9.09%), Arab Investment Company (Saudi Arabia, 10.25%), Libyan Foreign Bank (12.79%). The Bank reported consolidated total assets of JOD926mn (USD1.3 billion) and total capital of JOD139mn (USD195mn) at end September 2011.
CONTACT
Primary Analyst
Morris Helal
Senior Credit Analyst
Tel: 357 2534 2300
Email: morris.helal@ciratings.com
Secondary Analyst
Karti Inamdar
Senior Credit Analyst
Email: karti.inamdar@ciratings.com
Rating Committee Chairman
Tom Kenzik
Senior Credit Analyst
REGULATORY DISCLOSURES
The ratings have been initiated by Capital Intelligence. However, the issuer participated in the rating process. The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence had access to the accounts and other relevant internal documents of the issuer for the purpose of the rating but considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.
The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in November 1994. The ratings were last updated in December 2010.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com
