Invest Bank's financial strength and long-term foreign currency ratings raised

The Long-Term Foreign Currency Rating is also raised to 'BBB' from 'BBB-', while the Short-Term Rating is affirmed at 'A3'. The Foreign Currency Ratings are underpinned by the support of the federal government and the Bank's strong capital adequacy ratio. The Support Rating is maintained at '3', indicating a high likelihood of support from the government, in case of need. A 'Stable' Outlook is assigned to all ratings.

Management's conservative stance had served the Bank well during a very problematic period for the banking sector and IB has emerged not only relatively unscathed, but also somewhat stronger.

IB continues to adopt a cautious lending stance in view of the ongoing problems in some of the sectors. However, the Bank is expanding its geographic reach and is investing in staff and technology in anticipation of better GDP growth in the future. While net profit growth has been modest in recent periods, IB has reported strong ROAAs and operating profitability ratios on the back of good growth in net interest income, a low operating cost base and a reasonably high level of non-interest revenues.

The Bank's asset quality ratios have also strengthened in the recent past, a period that had been characterised by deteriorating NPL and coverage ratios for many of its peers. IB has written off a number of its older NPLs and the Bank's coverage ratio has risen to satisfactory levels. In addition, its large capital base (relative to the size of its balance sheet) and high profitability provide further safeguards. IB's capital adequacy and Tier I ratios continue to be solid. Liquidity ratios tightened towards end-2011 but the main parameters were still at adequate levels. Moreover, key liquidity ratios improved at the end of the first quarter of 2012.

IB was incorporated in the emirate of Sharjah in 1975. Its principal shareholders are businessmen from Sharjah and Abu Dhabi. With total assets of AED10 billion at end-March 2012, it ranks among the smaller banks in the country. The Bank is primarily a corporate banking institution. The bulk of its customers are small and medium-sized companies, although with the growth of the Bank's capital, IB is increasingly in a position to reach out to some of the larger companies as well. Contractor and trade finance and loans to manufacturing companies are important corporate banking activities. The Bank operates a small network of 13 branches.