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Fitch affirms EBI ratings at 'A'

The Issuer Default rating, Short-term and Individual ratings reflect EBI's strong UAE franchise, consistent profitability, adequate capitalisation and good asset quality. They also reflect the bank's moderate liquidity ratios, rapid loan growth and concentrations within the corporate loan portfolio. The Support rating reflects an extremely high probability of support being provided by the UAE authorities, should it ever be required.

Performance in 2005 was characterised by strong revenue growth, from both interest and non-interest sources, improved margins and a declining cost/income ratio.

However, profitability in Q206 declined compared to Q106 in the absence of IPOs in the market, but it does not otherwise appear to have been adversely affected by the downturn in the local stock market.

Asset quality remains good with impaired loans representing 1 per cent of total loans, although the banking sector remains exposed to a potential real estate bubble. Funding is becoming more diversified through the issuance of medium-term notes, commercial paper, syndicated loans and repo facilities and the bank remains adequately capitalised with a total capital ratio of 16.3 per cent at end-2005. EBI was formed in 1986 from the government-arranged merger of three troubled wholesale banks. The group is 77 per cent-owned by the Government of Dubai, with the remaining 23 per cent of equity widely held by local UAE investors.