Moody's has downgraded the long-term and short-term issuer ratings of Bahrain Islamic Bank (BIsB) by two notches to Ba1/Non-Prime from Baa2/Prime-3. Concurrently, the institution's stand-alone bank financial strength rating (BFSR) was lowered to E+, which maps to a baseline credit assessment (BCA) of B1.
Both the Ba1 issuer ratings and BFSR of E+ remain under review for possible further downgrade.
Ratings Rationale
The downgrade of BIsB's ratings reflects a material weakening in the institution's stand-alone financial profile, as shown in the significant losses it posted in the last two years and the erosion of its capital base in the absence of new capital injections. The sharp deterioration of the bank's asset quality since 2008 is at the core of BIsB's financial problem. Results in 2010 show a very high level of non-performing loans, driven for the most part by some high corporate and real estate sector concentrations in the institution's loan book.
No comments:
Post a Comment