Dubai: Rating agency Moody’s Investors Service, (Moody’s) has affirmed all ratings and assessments of the 11 banks it rates in Saudi Arabia.
The rating agency changed the outlook on the long-term deposit ratings to negative from stable for ten of the banks and maintained the negative outlook on the long-term deposits of one bank.
The rating action follows Moody’s decision to change the outlook to negative from stable on the Saudi Arabian government’s A1 rating on 1 May 2020.
Moody’s decision to affirm the ratings of all 11 banks reflects the rating agency’s view that the current ratings continue to reflect the resilience in their financial performance underpinned by strong capital buffers, favorable funding profiles and ample liquidity buffers, the rating agency said in a statement.
Moody’s decision to change the outlook to negative from stable on ten of the banks long-term deposit ratings captures the potential weakening capacity of the government of Saudi Arabia to provide support in case of need, as implied by the negative outlook on the A1 government issuer rating.
A secondary driver for the negative outlook is the weakening operating environment on the back of lower oil prices, reduced government spending and spread of coronavirus which, if prolonged, could lead Moody’s to revise downwards its assessment of the operating environment, Moody's said.