"We believe that political and economic tensions are
easing in countries where Al-Baraka Banking Group operates, and that the group
has shown resilience in the impaired operating environment caused by the tensions,"
an S&P statement said.
"We are affirming our 'BBB-/A-3' ratings on Al-Baraka
Banking Group and removing them from CreditWatch negative. The negative outlook
reflects the likelihood that the group's operating environment will, over time,
tarnish its financial profile and that its ambitious growth strategy could
weaken its already moderate capitalization," it added.
S&P affirmed its “BBB-/A-3” long and short-term
counterparty credit ratings on ABG and removed them from CreditWatch, where
they had been placed with negative implications on Feb. 22, 2011. The outlook
is negative.
"The CreditWatch resolution and ratings affirmation
reflect the easing of political and economic tensions compared with the first
half of the year in countries where the ABG group operates, as well as its
resilience to the impaired operating environment caused by those tensions.
Positive rating factors include the group's strong brand recognition in Islamic
banking, good funding and liquidity profile, very limited concentration within
its financing portfolio, and adequate resilience of its asset quality and
financial performance. However, we remain concerned because most of the
countries in which the group operates are expected to remain under pressure due
to heightened political and economic risk," S&P added.
However, S&P believe that the group's capitalization
is on a negative trend.
ABG's main subsidiary, Albaraka Turk Katilim Bankasi AS
(Albaraka Turk; BB/Negative/B), is following an ambitious growth strategy that
is weakening capitalization and could lead to asset quality deterioration.
