Fitch Ratings has affirmed Saudi-based Saudi British Bank's (SABB) long-term foreign currency Issuer Default Rating (IDR) at 'A' with a stable outlook.

Fitch has simultaneously affirmed SABB's long-term local currency IDR at 'A' with a stable outlook, short-term foreign currency IDR at 'F1', individual rating at 'B/C', support rating at '1' and support rating floor at 'A-'.

SABB's IDRs and Individual Rating reflect consistent profitability, adequate capitalisation and a comfortable liquidity position. The ratings also consider SABB's strong franchise and the significant benefits derived from being an associate bank of HSBC Holdings ('AA'/Outlook Negative).

The ratings are constrained by SABB's modest size, concentration of business within Saudi Arabia and risks inherent in the domestic economy.

The Support Rating and Support Rating Floor reflect Fitch's view of an extremely high probability of support from the Saudi Arabian Monetary Agency (SAMA) in case of need. The agency also believes that there is a high probability of support from SABB's major shareholder, HSBC Holdings.

Despite a slowdown in the Saudi economy in 2009, SABB's profitability has held up fairly well during the nine-month period of 2009, with net income of SR2 billion ($533 million).

Rising impairment costs are the bank's biggest challenge and at end-of  nine-month period totalled SR782 million, compared to SR371 million in 2008. The net margin has remained above 3 per cent during  nine-month period of 09 and 2008. Cost efficiency remains good, with a cost/income ratio of 30.6 per cent in  nine-month period.

SABB is the sixth-largest bank in Saudi Arabia, 40 per cent-owned by HSBC and active in retail and corporate banking and treasury. It also offers investment banking, insurance and brokerage services through subsidiaries.

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs-TradeArabia News Service