Dubai – Mubasher: Fitch Ratings has affirmed Commercial Bank of Dubai's (CBD) long-term issuer default rating (IDR) and viability rating (VR) at 'A-' and 'bb+', respectively, with a stable outlook.

The IDR rating was backed by support from the UAE sovereign, which Fitch believed it supported the banking system.

Fitch has expected “a high willingness of the UAE authorities to support the banking sector, which has been demonstrated by their long record of supporting domestic banks, and is also underpinned by close ties with and part government ownership of some banks,” according to a statement.

The rating agency has forecast further pressure on CBD's asset quality and profitability this year, with the latter attributed to “low-interest rates and a subdued operating environment.”

Capital ratios of CBD are considered only adequate due to high loan concentrations and problem loans generation ratio. Fitch, therefore, expected the bank to maintain its capitalisation through internal capital generation and risk-weighted asset optimisation.

The bank’s liquidity is seen healthy, with net liquid assets representing 13% of CBD’s total assets at the end of 2020. This led to covering 18% of customer deposits, which mainly fund the bank and accounted for 89% of non-equity funding by December 2020.