Ahli United Bank's ratings affirmed

The former is set one notch above Bahrain's Sovereign Long-Term Foreign Currency Rating on the basis of AUB's diversified balance sheet and revenue streams derived from operations in higher rated sovereigns - namely Kuwait, Qatar, Oman and, to a lesser extent, the UK. Exposure to Bahrain remains limited. The Bank's Financial Strength Rating of 'A' was maintained and continues to be supported by AUB's good asset quality, solid capital base and improving profitability. Factors constraining the ratings are the Bank's reliance on interbank funding, although this is reducing, and its moderate liquidity. The Support level remains at '3', denoting the high likelihood of official support from the Central Bank of Bahrain in case of need. The Outlook for all the ratings is 'Stable'.

AUB is well managed and executes a clear business strategy that has earned it important franchises in many of the oil-rich Gulf Cooperation Council (GCC) markets. The balance sheet and sources of income remain largely GCC based reflecting the Bank's chosen strategy. Although the operating environment within the GCC region remains challenging, and credit risks particularly in the corporate sector remain relatively high, AUB follows prudent risk management practices. Asset quality is sound as evidenced by a relatively low non-performing loan (NPL) ratio and more than full loan-loss reserve cover. The Bank's credit policy remains cautious in the current environment.

While AUB's sources of funding are diversified, in recent years measures have been adopted to reduce the reliance on sensitive wholesale funds through further broadening of the customer deposit base. The results of these actions were clearly evident in 2011, which saw interbank borrowings contract significantly, while in H1 2012 term debt was repaid with no adverse impact on liquidity. Over time, the growing contribution of customer deposits to total liabilities should continue to enhance the Bank's funding profile and improve concentration risks. AUB's liquidity is improving and rests on a growing pool of customer deposit funding. A capital increase in 2011 has reinforced the capital base and provided a solid basis for ongoing asset growth. Profitability continued to grow at both operating and net levels on the back of sustained growth in net interest income together with close cost control. The Bank's sources of non-interest income are well diversified reflecting a broad product mix.

AUB, incorporated in Bahrain on 31 May 2000, is the name adopted for the entity formed by the merger of the erstwhile Al-Ahli Commercial Bank BSC, and United Bank of Kuwait, a bank incorporated in the UK. The Bank is managed along the lines of a universal bank. The focus on the GCC market is significant given that customers increasingly regard the region as a single market. Business operations are organized into three principal divisions: (i) retail banking, (ii) corporate banking, and (iii) treasury, investments, private banking and wealth management. Prominent major shareholders of AUB (>5%) include the Public Institution for Social Security, Kuwait (18.8%), Social Insurance Organisation (Bahrain) (10.2%) and Tamdeen Investment Company (8.7%). As at end-June 2012, total assets amounted to $29.6bn and total capital was $3.7bn.