S&P trims Al Baraka Banking

S&P said it downgraded Al Baraka Banking Group to BB- from BB.

“The likely severity of the Covid-19-induced economic shock has raised our loss expectations for ABG's portfolio. We expect this shock will affect countries where ABG operates – albeit to differing extents – and will exacerbate existing vulnerabilities inherent in its financing book,” S&P said in a press release.

Al Baraka has exposure in Turkey, Jordan, Algeria and Egypt, the agency said.

“We now anticipate asset quality will deteriorate, with nonperforming financings (NPFs) exceeding 7.0% in 2021. We also expect a significant increase in the cost of risk to about 130 basis points (bps) over 2020, compared with 76 bps in 2019,” S&P said.

The outlook is stable.

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