Fitch affirms BMB Investment Bank
Global rating agency Fitch has affirmed BMB Investment Bank's Long-term Issuer Default Rating (IDR) at 'B-' and revised the Outlook to Positive from Stable. At the same time, the agency has affirmed the Viability Rating (VR) at 'b-'.
The revision of the Outlook to Positive reflects the bank's success in de-leveraging its balance sheet, paying down legacy financial obligations and funding commitments as and when they fall due and reducing its reliance on investments in private equity funds to drive profitability. Fitch notes the increasing contribution to operating revenues from more stable fees and commissions in 2011 and H112, following BMB's change of strategy to develop new business lines, which include trade finance, capital markets trading activities and asset management.
BMB's IDRs are driven by its VR, and so the Long-term IDR is highly sensitive to any rating action on the VR. The Support Rating is based on Fitch's view that BMB would be highly unlikely to receive solvency support from the Bahraini authorities, if needed, given its wholesale bank status.
BMB's VR reflects its small but growing wholesale banking franchise, relatively high exposure to market risk, concentrated wholesale funding profile and small equity base. The agency also considers the bank's achievements in reducing its exposure to private-equity commitments, its improving operating performance since the change in management in 2009 and success in the implementation of its new corporate strategy which includes, amongst others, diversifying earnings into more stable, recurring revenue streams.