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Fitch affirms ratings of eight UAE banks, upgrades Al Hilal

Fitch affirms ratings of eight UAE banks, upgrades Al Hilal
BOS
BOS
0.00% 0.48 0.00
Mashreq
MASQ
-0.59% 168.00 -1.00
DIB
DIB
0.17% 5.84 0.01

CBD
CBD
4.35% 6.96 0.29
Sharjah Islamic Bank
NBS
-0.45% 2.23 -0.01
RAKBANK
RAKBANK
-0.38% 5.18 -0.02

ADIB
ADIB
-2.50% 10.92 -0.28
Fitch has upgraded Al Hilal Bank and affirmed eight other banks and one non-bank financial institution rating, according to Emirates 24/7.
The international rating agency said it had upgraded Al Hilal Bank's (AHB) Viability Rating (VR) and affirmed the VRs of the other seven banks and all other ratings.
The affirmation of the banks' Long-Term IDRs, Support Ratings and Support Rating Floors, reflects the extremely high probability of support available from the UAE authorities, and governments of Abu Dhabi (AA/Stable/F1+) and Dubai, if required, according the agency. Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Mashreqbank, Commercial Bank of Dubai, RAK Bank, Sharjah Islamic Bank, Bank of Sharjah and Dunia have been rated in the report.
Fitch's opinion of support is based on the ability and willingness of the authorities to support the banking sector, which has been demonstrated by UAE authorities' long track record of supporting domestic banks, as well close ties and ownership links with the government at a number of banks. Fitch's view of support also considers the sovereign's strong capacity to support the banking system, sustained by its sovereign wealth funds and on-going revenues, mostly from its hydrocarbon production, and the moderate size of the UAE banking sector in relation to the country's GDP.
Five of the banks - Abu Dhabi Islamic Bank (Adib), AHB, Commercial Bank of Dubai (CBD), Dubai Islamic Bank (DIB), and Mashreqbank - have Support Ratings of '1', reflecting the extremely high probability of state support. Three banks - Bank of Sharjah (BoS), National Bank of Ras Al Khaimah (RakBank) and Sharjah Islamic Bank (SIB) - have a Support Rating of '2', reflecting lower, but still high, systemic importance.
Fitch considered all the banks to be domestic systemically important financial institutions (D-SIFI) based on Fitch's view of each bank's systemic importance relative to other banks in the banking system, and considering, amongst other things, market share and franchise. The 'A+' Support Rating Floor of the two Abu Dhabi banks - Adib and AHB - are at the Abu Dhabi banks' D-SIFI Support Rating Floor of 'A+', reflecting their high systemic importance. Abu Dhabi banks' D-SIFI Support Rating Floor is one notch higher than other UAE banks, due to Abu Dhabi's superior financial flexibility.
The 'A' Support Rating Floors of DIB and Mashreq are at the UAE D-SIFI Support Rating Floor of 'A', reflecting their D-SIFI status in the UAE and Dubai, in particular. CBD's Support Rating Floor is one notch below the UAE D-SIFI Support Rating Floor due to Fitch's view that it is less systemically important based on its smaller size and market share, and niche franchise, compared with DIB and Mashreq. The Support Rating Floors for the remaining three banks are 'BBB+', two notches below the UAE D-SIFI Support Rating Floor, reflecting Fitch's view of their lower relative systemic importance, due to smaller market shares and franchises.
The Adib, AHB, DIB, Tamweel and SIB Sukuk Company Ltd trust certificate issuance programmes, Rakfunding Cayman Ltd, and the senior unsecured notes issued under these entities are rated in line with their respective banks' IDRs and are therefore subject to the same rating drivers.