Fitch affirms ratings of six UAE banks

Fitch Ratings on Thursday affirmed the long-term IDRs and support ratings of six banks in the United Arab Emirates.

National Bank of Abu Dhabi (NBAD), First Gulf Bank (FGB), Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Emirates NBD (ENBD) were affirmed at a support rating of “1” based on “the extremely high probability of state support.”

HSBC Middle East Limited’s support rating of “1” was based on its strong potential for help from its parent company, HSBC Holdings.

“Fitch's view of support 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, despite the lower oil prices, and the moderate size of the UAE banking sector in relation to the country's GDP,” the report said.

Asset quality metrics are expected to remain stable in 2016 and all six banks are profitable, despite tightened liquidity. Fitch says funding and liquidity are still strong as “banks do not have trouble increasing customer deposits if they are willing to pay for them.”

Fitch added that capital ratios are also adequate among the six banks. Fiscal buffers, supported by high levels of pre-impairment operating profit, are able to absorb credit losses.