Fitch af­firms BMB In­vest­ment Bank

The Pak Banker - - Front Page -


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.

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