Fitch affirms CBD's A- rating with stable outlook

Global ratings agency Fitch on Wednesday recognised Commercial Bank of Dubai’s (CBD) strong capitalisation and consistently good profitability in challenging market conditions.

In a media statement, the agency noted that a resumption of meaningful loan growth (up eight per cent) supported CBD’s core earnings generation, and healthy pre-impairment operating profitability ensured good loss-absorption capacity.

The agency reaffirmed long-term issuer default rating of Commercial Bank of Dubai as A- with a stable outlook. Further, Fitch observed that CBD’s strong focus on banking to UAE family-owned business groups provides healthy margins, and a low cost/income ratio (H1 2013: 30 per cent) versus its peers in the market.

It noted that although the loan book is characterised by high sector and single borrower concentrations, as is typical in the region, direct lending to real estate is much lower than peers.

CBD’s Fitch core capital ratio was healthy at 18.8 per cent for the nine-month period ended September 30, 2013, and is expected to stay high as growth in risk weighted assets is compensated by sound internal capital generation.
 

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