Moody's Affirms Cairo Amman Bank's Ratings, Affirms Stable Outlook

Strategic Insights -

Moody's Investors Service has recently affirmed the ratings of Cairo Amman Bank (CAB), citing the bank's solid capital levels, robust retail-deposit funding profile, and strong liquidity. However, the stable outlook on the bank's long-term deposit ratings balances these strengths against the ongoing high geopolitical risks in the region and markets where the bank operates. The affirmation of CAB's Baseline Credit Assessment (BCA) reflects its ability to maintain high capitalization and liquidity buffers despite the risks faced by the bank in the Palestinian territories.

Key Takeaways:

  • Moody's has affirmed all ratings and assessments of Cairo Amman Bank, including the B1/NP long-term deposit ratings and Ba3/NP Counterparty Risk Ratings (CRRs).
  • The bank's Baseline Credit Assessment (BCA) has been affirmed at b2, reflecting its solid capital levels, retail-deposit funding profile, and solid liquidity.
  • However, the bank's BCA captures increased asset risks faced by the retail segment in Jordan and credit and geopolitical risks in the Palestinian territories.
  • The bank's assigned macro profile has been lowered by one notch to Weak due to the high risks in the bank's Palestinian operations, primarily in the West Bank.
  • CAB's B1/NP long-term deposit ratings are derived from its b2 BCA and a one-notch government support uplift from the Government of Jordan (Ba3 stable).

Statistics:

  • CAB's Basel III CET1 capital ratio is 15.5% as of end 2024.
  • Problem loans account for 9.0% of gross loans by March 2025.
  • Net lending in Jordan accounts for 72% of CAB's activities as of December 2024.
  • CAB's Palestinian operations account for the majority of the remaining lending.

Sources:

  • Moody's Ratings (pub. November 2024)
  • https://ratings.moodys.com/rmc-documents/432741
  • https://ratings.moodys.com (Rating Methodologies page)