Fitch affirms Abu Dhabi Commercial Bank at Support '1'

Fitch Ratings has today affirmed Abu Dhabi Commercial Bank's Support rating at '1'.

  • United Arab Emirates: Tuesday, April 01 - 2008 at 16:18
  • PRESS RELEASE



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The rating reflects the extremely high probability of support, should it ever be required, from the UAE authorities, reflecting ADCB's majority ownership by the government of Abu Dhabi through the Abu Dhabi Investment Council and the bank's position as one of the market leaders in the country.

ADCB's performance remains robust despite a 3% dip in net income in 2007 yoy.

A decline in IPO fee income accompanied by an impairment charge of AED560m on non-trading investments and credit default swaps (due to the international credit turmoil) has negatively affected the bank's bottom-line profitability.

Further write-downs might take place, subject to market conditions. Nonetheless, core banking activities continued to grow on the back of rising business volumes and Fitch expects this trend to continue in the medium term.

ADCB also booked Dhs295m in revaluation gains from investments in property in 2007.

Asset quality is strong but rapid loan growth might give rise to future problem assets.

ADCB's capital ratios have fallen significantly since 2005 but remain adequate, with a Fitch eligible capital ratio of 12% at end-2007. Further deterioration in the capital ratios, however, might be a cause of concern.




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Notes and media contacts

ADCB was formed in 1985 and is one of the largest banks in the UAE. Its main shareholder is the government of Abu Dhabi (a 65% stake, held via the ADIC). ADCB is a full-service bank, operating through a network of branches and ATMs across the UAE. ADCB has established strategic agreements with Australia's Macquarie Bank ('A+'/'F1'/Stable) in real estate, treasury, infrastructure and investment banking. The bank is also seeking to acquire a minority stake in one of Malaysia's leading Islamic banks.
Posted by staff reporter
Tuesday, April 01 - 2008 at 16:18 UAE local time (GMT+4)

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