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Sun 22 Nov 2009 11:28 AM

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The Middle East’s 25 smartest banks-Samba Financial Group

The Middle East’s 25 smartest banks-Samba Financial Group

Samba Financial Group is one of the Saudi banking sector’s biggest players. It is the Kingdom’s second largest bank by total assets, with a market share of about fourteen percent, and the fourth largest by capital.

And that scale is unlikely to change anytime soon. In August ratings agency Capital Intelligence (CI) affirmed Samba’s ratings, leaving it with a long-term foreign currency rating of ‘AA-’, the short-term foreign currency rating of ‘A1’ and the financial strength rating of ‘AA-’. Samba’s support rating is ‘2’, while all ratings carry a Stable Outlook.

The agency noted that liquidity by all major ratios is very sound, partly a consequence of Samba’s historical ability to generate time deposits and to do so with minimal effect on its cost of funds. And the bank's special commission differential is very similar to that of the peer group; that, coupled with continued cost control, allowed the bank to be one of the few in the Kingdom to post an increased net profit for 2008.

CI said that Samba’s balance sheet displays strength in all areas, and in general has weathered the current economic crisis very well. Even by CI’s conservative measurement of non-performing loans (NPLs), the bank’s asset quality remained sound and NPLs were more than completely covered by loan-loss reserves.

Like most banks in Saudi Arabia and elsewhere in the Gulf, Samba is facing write-offs, or at least workouts, relative to several large family-owned corporations. While full resolution of that issue may still be some time away, CI said that Samba is well equipped to deal with these possibilities, because of its strong capital position and its robust earnings profile.

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