Question

How samba bank would have been able to achieve high credit quality with it's strong liquidity position and strategy direction.

Answer 1

Answer:

Explanation:

Standalone Strength Drives IDRs: The Issuer Default Ratings of SAMBA Financial Group reflect its standalone credit profile as indicated by its Viability Rating (VR).

SAMBA’s VR is highly influenced by the bank’s large capital base. It also factors in the very strong liquidity profile, sound asset quality and profitability, and a solid corporate banking franchise. It also reflects some concentrations in lending.

Large Capital Base: SAMBA is one of the best capitalised banks in Saudi Arabia, with a Fitch Core Capital ratio of 21.1% at end-2018. Sound profitability provides an additional buffer against a credit shock (pre-impairment operating profit equal to 4.8% of average gross loans in 2018).

Very Strong Funding, Liquidity: SAMBA has a large and stable funding base with a high proportion of non-interest-bearing deposits. Its liquidity position is very strong, with a large investment portfolio of high-quality liquid assets covering about 50% of customer deposits at end-2018. Its loans-to-deposits ratio is also among the lowest in the kingdom.

Solid Corporate Banking Franchise: SAMBA is one of the kingdom’s leading corporate banks (10% market share), particularly in capital markets. Its market share in retail is lower at only 4%. The bank has lost market share due to its contracting loan book, but retains one of the strongest franchises with an 8% market share of total domestic credit.