International rating agency Fitch has affirmed Abu Dhabi Islamic Bank (ADIB)'s long-term, short-term and support ratings at A-, F2 and 2 respectively. The Bank was assigned an individual rating of C/D, stated a press release.
The ratings reflect a short but successful track record underpinned by increasing diversification of the loan portfolio and moderate growth in profits. They also indicate a reliance on the domestic economy and the need for further diversification of business volumes and revenue streams. Asset quality is good, but should be viewed in light of its relatively short track record.
Capitalization is strong, but capital ratios are expected to erode over time as asset growth accelerates. The bank's ratings also reflect its shareholding structure, which provides a strong likelihood of potential support.
Established in 1997 ADIB is the only new banking license granted in the United Arab Emirates (UAE) since the 1980s. The Abu Dhabi ruling family currently holds 29 percent of the bank's equity and the Abu Dhabi Government, represented by the Abu Dhabi Investment Authority (ADIA), holds 10 percent.
The remaining 61 percent is widely held by local and regional investors. As an Islamic bank the institution provides a broad range of products that comply with Islamic Sharia'a. It has a small network supported by up to date distribution channels such as Automated Teller Machines (ATM)s and telephone banking.
Fitch's support and individual ratings for banks assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
