S&P Global Ratings raised the long-term issuer credit rating of National Commercial Bank, which last week became Saudi National Bank following its merger with smaller rival Samba Financial Group. NCB’s 'A-' rating and stable outlook reflects on the strength of the merged SNB entity, which received a GCC regional scale rating of 'gcAAA', S&P said in statement on Sunday. It withdrew its rating on Samba after its assets and liabilities were transferred to SNB. “With a 30 per cent market share built on well-established franchises, SNB now enjoys a prime market position, strong capitalisation and a well-balanced risk profile,” S&P said. “The stable outlook reflects our expectations that … the joint entity will successfully manage the risks associated with integration and further lending growth.” Last week, NCB announced the completion of its merger after shareholders of Samba received shares in the merged entity, which formally began operations on April 1. NCB and Samba shareholders approved the merger last month after the Saudi Central Bank, the General Authority for Competition, the Capital Markets Authority and the stock exchange approved the deal. The two lenders agreed in October to combine their balance sheets to create the kingdom's biggest bank with an asset base of 896 billion riyals ($239bn). Both NCB and Samba were well-established Saudi banks with long-standing customer relationships and their core profit-generating activities are likely to complement each other. Retail banking accounts for roughly 50 per cent of NCB's operating income and corporate lending accounts for 43 per cent of Samba’s, S&P said. “As such, the merger has likely created a national champion with an enhanced franchise value. Therefore, alongside modest cost savings and synergies, we expect restructuring costs to be contained,” it said. The combination of two balance sheets has created a “more balanced” credit risk profile and S&P expects SNB's asset quality metrics to remain well-placed compared with its peers in Saudi Arabia and the broader GCC region. The ratings agency expects the merged entity’s non-performing loans ratio to increase to 1.6 per cent and cost of risk to increase to 90 basis points due to the impact of the Covid-19 pandemic. However, the bank is likely to follow “conservative” underwriting standards to maintain its asset quality metrics. “This has been the primary consideration for us to strengthen our assessment of the merged entity's risk profile”, S&P Global said. Last week, <a href="https://www.tadawul.com.sa/wps/portal/tadawul/home/announcement-details/!ut/p/z1/hZBNb8IwDIZ_yw492w39GrcSpetWErT1YzQXFGAwpDappsDEvycCrgXfLD1-7ccgYQlSq9Nhr-zBaNW5vpXRSuRzmmNCCqxEhulns6Azzoq6iKCB7ytCCE381wDnb-8idkiaN1lTTRADkI8TbvM4Uik-my9_NLQuIx6FCIFam7_e-ZQgQaZCLGpBGWeiWomaz9gXtBGJJoE7Rl73jeqEz4DgDjwQ-gC578z69t5fa4ephx5atVX_x85zwkprqiwsw3iM2Jh-UPpcnvu1cTG-nyAMfZYlvNoNbMdt2L5cAH1w5os!/dz/d5/L0lJS2FZcHBnL0lKakFBQVRLQUFTQVFvd0NwaUFBSUs2R0RnISEvNE5sR294cWNRQSEhL1o2X05ITENIMDgySzBUTkYwQVFWT0NCTUVLVUs2LzYyNjMyLzE!/">SNB announced</a> the appointment of Ammar Al Khudairy as board chairman, replacing Saeed Alghamdi, who oversaw the merger. It also appointed Yazeed Al Humied as vice chairman in place of Rashid Sharif. With the finalisation of the merger, the Public Investment Fund, the kingdom's sovereign investment arm, has become the <a href="https://www.thenationalnews.com/business/banking/ncb-to-change-name-to-saudi-national-bank-after-its-merger-1.1157953">biggest</a> shareholder in SNB with a 37.2 per cent stake. The Public Pension Agency controls 7.4 per cent and the General Organisation for Social Insurance owns 5.8 per cent.