Moody's ups Emirates NBD ratings; outlook stable

Dubai - Bank's counterparty risk assessment boosted as well

Moody's Investors Service upgraded Emirates NBD's long-term deposit and senior unsecured ratings to A3 from Baa1.
It also boosted the bank's counterparty risk assessment to A2(cr)/P-1(cr) from A3(cr)/P-2(cr) following the upgrade of its baseline credit assessment, or BCA, to ba1 from ba2 and Moody's maintenance of existing government support assumptions, which result in four notches of rating uplift. Concurrently, the ratings agency affirmed the bank's Prime-2 short-term deposit ratings. The outlook on the long-term ratings is stable.
The upgrade of Emirates NBD's BCA reflects the bank's improved and resilient financial profile, primarily improved asset quality that we expect to remain stable despite slowing economic growth in a low-oil-price environment; stronger loss-absorption buffers coupled with resilient profitability and strong funding and liquidity, despite the challenges stemming from lower oil prices.
The primary driver for the upgrade of the BCA to ba1 from ba2 is the material improvement in recent years of the bank's asset quality metrics, which Moody's expects will stabilise in the next 12 to 18 months. Although Emirates NBD's 6.9 per cent reported ratio of non-performing loans remains higher than the UAE and global peers, it has materially reduced from a peak of 14.3 per cent in 2012. The second driver for the upgrade of Emirates NBD's BCA is the strengthening of its loss-absorption buffers.
Moody's expects that Emirates NBD's funding profile will remain supported by the broad and diversified access of the bank to customer deposits - stable at circa 70 per cent of total assets since 2013 - through its branch network, the largest in the UAE.
- business@khaleejtimes.com