IIRA Assigns Fiduciary Ratings to AlBaraka Bank Egypt

Manama, June 7, 2015 - Islamic International Rating Agency (IIRA) has assigned an international scale rating of 'B-/B' (Single B Minus / Single B) and national scale rating of 'A-(eg)/A2(eg)' (Single A Minus / A Two) to AlBaraka Bank Egypt (ABBE or the 'the bank'). Outlook on the assigned ratings is 'Stable'. The fiduciary score has been assessed in the range of '66-70', reflecting adequate fiduciary standards wherein rights of various stakeholders are adequately protected. The fiduciary score is an aggregation of scores assigned to its three sub-sections, namely Corporate and Shari'a Governance, and Asset Manager Quality.

Ratings assigned to ABBE derive strength from the franchise of Albaraka Banking Group (ABG) as the bank's principal owner. Regarded as being amongst the pioneers of Islamic banking, the group's multi jurisdictional presence also presents potential for business synergies. Economic and sector forecasts for Arab Republic Egypt are encouraging given improving investment climate in the country and its inherent resilience, backed by a diversified economic base and a young population.

The bank's sound liquidity and profitability indicators in addition to favorable and improving asset quality lend support to the ratings assigned. Business base features moderate concentration, though gradually improving with increasing retail orientation. Capitalization, although meeting the regulatory minimum, requires reinforcement to keep pace with anticipated business growth.

The bank subscribes to a corporate governance code prescribed by the Central Bank of Egypt. Certain gaps remain when compared to international best practice. Specific licensing rules and regulatory requirements for Islamic banks, as distinct from conventional banks, have not yet been formalized in Egypt. An under-developed domestic Sukuk market results in reliance on treasury securities for liquidity management.

For further information on this rating announcement, please contact Mr. Raza Lakhani, CFA at raza.lakhani@iirating.com or email at iira@iirating.com.

Sabeen Saleem, CFA
Chief Executive Officer