Manama, December 13, 2015

Islamic International Rating Agency (IIRA) has reaffirmed national scale credit ratings of Bank of Khartoum (BoK or 'the bank') at 'AA- (sd) / A-1 (sd)' (Double A Minus / Single A One). Outlook on the assigned rating is 'Stable'.

The fiduciary score has been reassessed in the range of '71-75', reflecting adequate fiduciary standards wherein rights of various fund providers are adequately defined and protected. The fiduciary score is an aggregation of scores assigned to its three sub-sections, namely Corporate Governance, Shari'a Governance and Asset Manager Quality. Overall corporate governance practices in place at the bank are considered adequate, while leaving room for improvement. Shari'a governance practices are reinforced by the centralized Higher Shari'a Supervisory Board, serving as an additional layer governing Shari'a practices at the bank level.

Ratings have been reaffirmed primarily on the basis of sustained market position as the largest commercial bank in Sudan, and its entrenchment as the largest retail network, with a diversified and cost effective retail deposit base. A recently approved and announced branch based in the Gulf, will facilitate trade business and provide further confidence to some of the institution's counterparties. The bank continues to exhibit adequate liquid reserves, on account of continued supply of fresh liquidity.

While capitalization levels are considered above the statutory minimum, further reinforcement is required to support future risk assets growth and given the macroeconomic environment in which the bank operates. The rating committee has taken note of the incline in impairment indicators, with non-performance appearing in financing lines extended to some of the bank's largest counterparties over the period. Even though these accounts have been restructured with a favorable outcome expected, the trend highlights the risks of concentration in the business portfolio. IIRA will be closely monitoring developments in this regard.
 
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For further information on this rating announcement, please contact the undersigned at sabeen.saleem@iirating.com or Mr. Raza Lakhani at raza.lakhani@iirating.com.

© Press Release 2015