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Standard & Poor’s (S&P) has raised its assessment of National Bank of Abu Dhabi’s (NBAD) capital and earnings to “very strong”, and the Bank’s stand-alone credit profile (SACP) to ‘a’ from ‘a-,’ and affirmed NBAD’s long- and short-term credit ratings of ‘A+/A-1’ which maintains that NBAD has one of the strongest combined ratings in the Middle East.
S&P also rated NBAD’s Outlook “stable” and added: “The stable outlook reflects our expectation that NBAD will remain a dominant player in the UAE, with no significant change in its ownership or business and financial profiles over the next two years.”
S&P based its rating on NBAD’s “strong” business position, “very strong” capital and earnings, “strong” risk position, “average” funding and "adequate" liquidity.
“Our revision of the capital and earnings score was triggered by a more positive view on the Bank’s capitalisation,” S&P said.
“Our risk-adjusted capital (RAC) ratio before adjustments based on NBAD’s 2011 financial statements stood at an estimated 15.9% at year-end 2011, which compares very favorably in a global context. NBAD has lower risk-weighted assets than its peers, given the significant portion of its lending exposure to the Government of Abu Dhabi and related government-related entities. "We anticipate that NBAD’s pre-provision earnings generation will remain healthy in the coming years and we project that our RAC ratio before adjustments for NBAD will increase to about 16%-17% in the next 18 to 24 months, in line with strong internal capital generation.”
“We are pleased that S&P has affirmed our strong ratings,” said Michael Tomalin, NBAD’s Group Chief Executive. “The affirmation of our strong ratings is a confirmation of NBAD’s prudent management over the years.”
NBAD is the UAE’s most profitable bank and it has the highest market capitalisation. Global Finance has ranked NBAD since 2009 in its list of the World’s 50 Safest Banks, and the safest bank in the Middle East.
In 2010, NBAD became the first UAE Bank to earn more than US$1 billion in operating profits. NBAD trades in the Abu Dhabi Securities Exchange under the ticker symbol NBAD.
The Abu Dhabi Investment Council, an investment arm of Abu Dhabi Government, owns 70.5% shares in the NBAD Group. S&P also stated that NBAD benefits from the strong relationship with Abu Dhabi Government.
“We consider NBAD to be of ‘high’ systematic importance and the Abu Dhabi Government to be ‘highly supportive’ toward its banking sector,” S&P said.
NBAD is rated senior long term/short term A+/A-1 by Standard and Poor’s, Aa3/P1 by Moody’s and AA-/F1+ by Fitch giving it one of the strongest combined rating of any Middle Eastern financial institution.
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