Credit firm upgrades UAE banks’ ratings

Capital Intelligence, an international credit rating agency, yesterday raised the foreign currency long-term rating of three UAE banks – Sharjah Islamic Bank, Bank of Sharjah and National Bank of Fujairah – to A- from BBB+.

The banks’ upgrade follows a re-assessment of the ability and willingness of the UAE authorities to provide support if necessary. The likelihood of official support takes into account, inter alia, recent improvements in sovereign creditworthiness and Capital Intelligence’s expectation that the government would ultimately be willing to help distressed financial institutions owned by the federal and/or local governments, should the need arise.

The foreign currency short-term rating is maintained at A2 and the financial strength rating at BBB+. All ratings have a ‘stable’ outlook. The banks’ good management, solid capitalisation and consistently strong financials underpin the ratings.    

Capital said Bank of Sharjah has performed well in the current year.  The capital increase following the conversion of bonds in March 2008 has placed the bank in a strong position to expand its businesses.

Commenting on Sharjah Islamic Bank, Capital said the bank’s asset quality ratios remain strong with very few delinquencies in the financing portfolio and its performance in the current year has been good.

The rating agency said National Bank of Fujairah’s (NBF) asset quality is sound, with low levels of NPLs, good coverage ratio and relatively low customer concentrations. Its low risk provision charge and strong non-interest income underpin its good operating profitability. Liquidity is satisfactorily managed at NBF, it said.