Standard & Poor's Ratings Services said it had revised its outlook for Sharjah Islamic Bank (SIB) to positive from stable, reflecting the bank's recent capital increase and resilient financial performance.
At the same time, Standard & Poor's affirmed its "BBB" long-term and "A-2" short-term counterparty credit ratings on the bank.
"The positive outlook reflects our expectations that SIB will maintain its good financial profile and benefit from its close relationships with the government of Sharjah," said Mohamed Damak, Standard & Poor's credit analyst.
The ratings on SIB reflect its strong capitalisation, good financial performance, and ownership structure that is dominated by the government of Sharjah. Offsetting these positive factors are the bank's small size, high lending concentration, and rapid growth in loans untested by a sharp economic downturn.
The long-term rating on SIB is one notch higher than the bank's stand-alone credit quality, reflecting the agency's expectation that the Sharjah Government – which owns 30.7 per cent of SIB – would provide support if needed.
The rating agency said the bank displays a good financial performance despite mounting competition in the UAE and the costs attached to its distribution network and business expansion.