Moody's Investors Service has assigned to National Bank of Fujairah (NBF) deposit ratings of Baa1/Prime-2 and a standalone bank financial strength rating (BFSR) of D+, which is equivalent to a baseline credit assessment (BCA) of ba1. All long-term ratings carry stable outlook, CPI  Financial reported.

NBF's standalone BCA reflects its (1) small but growing franchise in the United Arab Emirates (UAE), supported by an improving risk management framework, (2) solid capitalization metrics underpinned by stable profitability and (3) solid liquidity metrics despite rapid asset growth. These strengths are moderated by (1) NBF's improving but still relatively weak, asset quality and (2) high balance sheet concentrations.

NBF's Baa1 deposit rating incorporate a high three notches of uplift from the bank's ba1 BCA, which reflects Moody's assessment of a high probability of systemic support from UAE government, in case of need. National Bank of Fujairah (NBF) is amongst the smallest banks in the UAE holding only a 1 per cent market share in terms of assets, loans and deposits. However, the bank has materially grown its balance sheet since 2009, whilst also strengthening its risk management framework following stresses during the crisis period.

Pre-crisis, NBF had a sizeable investment portfolio, which led to a net loss of AED 50 million in 2008, and also suffered further from the impairment of several large Dubai-based corporate exposures. A new, stronger management team has been in place since 2009 and has refocused NBF towards its core strengths in corporate and commercial banking, particularly in the fast growing and resilient trade finance area. This focus has resulted in high loan growth (albeit from a low base) of 16 per cent CAGR between 2009 and 2013, compared to UAE average of 4 per cent, and represented 91 per cent of the net income as of year-end 2013.