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Fitch downgrades Arab Bank to ‘BBB-’; negative outlook

By JT - Jan 09,2014 - Last updated at Jan 09,2014

AMMAN — Fitch Ratings announced Thursday in a press statement issued in London and received by The Jordan Times that it has downgraded Arab Bank Plc.’s long-term issuer default rating (IDR) to ‘BBB-’ from ‘A-’ and viability rating (VR) to ‘bbb-’ from ‘a-’ and removed them from rating watch negative. “The outlook is negative,” the press release said.

“The downgrades reflect heightened risks associated with parts of the bank’s operations across the Middle East and North Africa (MENA).” According to the press release, the effects have so far been manageable for Arab Bank (for example, loan impairment charges fell).

Nonetheless, the operating environment in Jordan is tough and underlying risks associated with the bank’s exposures, particularly in Egypt and Tunisia, have, in Fitch’s view, increased.

“The bank’s geographic diversification of operations, along with solid capitalisation, conservative overall risk appetite, stable funding profile, the structure of its network and affiliates and its liquidity management policies mean Fitch believes Arab Bank is able to mitigate risks associated with its domicile, but cannot completely offset them,” the press release explained. The bank’s profitability is currently sound and consistent, but Fitch considers it vulnerable to downside risks related to some markets. 

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