Fitch Ratings affirms ICD’s rating at A+, maintaining stable outlook
(MENAFN) On Wednesday, Fitch Ratings affirmed the Islamic Corporation for the Development's (ICD) long-term foreign currency issuer default rating at A+, maintaining a stable outlook. Fitch highlighted that ICD's solid credit rating is supported by substantial backing from its principal shareholders: The Islamic Development Bank, which owns 38 percent of ICD's paid-in capital, and Saudi Arabia, holding 24 percent by the end of 2023.
Fitch acknowledged ICD's efforts in reducing operational risks over the past three years, noting a significant shift in the corporation's strategy. ICD has been refocusing its operations on its core mandate of lending, moving away from more volatile equity investments. This strategic pivot is expected to continue over the medium term, with an emphasis on lending to higher-rated borrowers, thereby enhancing the stability of its financial profile.
However, Fitch also pointed out that while ICD's solvency has shown improvement, it is still constrained by high credit risk. As of the end of 2023, equity investments accounted for 24 percent of ICD's total banking exposures, a reduction from 41 percent in 2017. Despite this decline, the proportion remains elevated. Fitch anticipates further decreases in equity participations as ICD continues to prioritize its lending operations over riskier equity investments.
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