...Sovereign Support Drives Ratings: Alinma Bank's Issuer Default Ratings (IDRs) reflect a high probability of support from the Saudi authorities, if required. Fitch's view of support considers the authorities' strong ability and willingness to support banks, but also Alinma's lower systemic importance than the larger banks due to its smaller size, market share and franchise. The Viability Rating (VR) reflects the bank's small but growing Islamic franchise, sound asset quality and healthy capital, but also rapid financing growth and a weak operating environment. Depressed Operating Environment: Alinma's VR incorporates Fitch's forecast of a recession in Saudi Arabia in 2017, with real GDP expected to contract by 0.4%, followed by low growth of 0.8% and 1.3% for 2018 and 2019, respectively, as the kingdom continues with fiscal tightening, limiting opportunities for the banks to finance infrastructure projects. There are signs of credit deterioration, but we believe this will be manageable for...
