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Fitch raises the Viability Rating of United Arab Bank.

by Swati Gupta

April 24, 2023 2

Fitch Ratings, one of the leading credit rating agencies in the world, has raised the Viability Rating of United Arab Bank (UAB) from ‘bb-’ to ‘bb’. The improved rating reflects the bank’s strong capitalization, improving asset quality, and sound liquidity position.

The Viability Rating is an assessment of a bank’s standalone creditworthiness, excluding any external support. It is based on various factors, including capitalization, asset quality, profitability, and liquidity. The higher the rating, the better the bank’s ability to withstand credit and economic risks.

Fitch’s upgrade of UAB’s Viability Rating is a significant achievement for the bank, which has been working to strengthen its financial position and improve its creditworthiness. The rating agency noted that UAB’s capitalization has improved significantly, with its Tier 1 capital ratio rising to 16.3% at the end of 2021, from 13.9% at the end of 2020.

Fitch also noted that UAB’s asset quality has been improving, with the bank’s non-performing loan (NPL) ratio declining to 5.5% at the end of 2021, from 7.4% at the end of 2020. The bank has been actively managing its NPL portfolio and reducing its exposure to riskier sectors, such as real estate and construction.

UAB’s liquidity position is also strong, with a loan-to-deposit ratio of 75.7% at the end of 2021, which is lower than the industry average. The bank has been maintaining a healthy funding profile and diversifying its funding sources to reduce its reliance on wholesale funding.

Commenting on the upgrade, UAB’s CEO, Samer Tamimi, said, “We are delighted to receive this upgrade from Fitch, which is a testament to the hard work and dedication of our team. We have been working tirelessly to strengthen our financial position and improve our creditworthiness, and this upgrade reflects our progress.”

He added, “We will continue to focus on maintaining a strong balance sheet, managing our risks prudently, and delivering value to our stakeholders.”

UAB is a leading bank in the United Arab Emirates (UAE) and has been operating for over four decades. The bank offers a wide range of banking services to individuals, corporates, and government entities. Its key areas of focus include retail banking, corporate banking, and treasury and capital markets.

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