Limassol: Moody’s Investors Service has today affirmed Emirates NBD PJSC’s (ENBD) Baa1 long-term deposit ratings, Prime-2 short-term deposit ratings and ba2 baseline credit assessment (BCA).
At the same time, Moody’s changed the outlook on the bank’s long-term ratings to positive from stable.
Moody’s affirmation reflects ENBD’s (1) established operations in the UAE, notably its retail business which, through the largest branch network in the country, drives ENBD’s strong profitability and funding metrics; and (2) robust risk management framework, coupled with a strong treasury function, which support the bank’s asset quality and funding profile.
These strengths are moderated by (1) high and increasing level of related-party, borrower and sector concentrations leaving the bank susceptible to event risk; and (2) relatively weak, albeit improving, asset quality metrics and moderate loss-absorption capacity (loan loss coverage and capitalisation levels), particularly in light of the zero-risk weighting applied to the exposures of the Dubai government.
The change in outlook to positive from stable reflects Moody’s view that despite the low oil-price operating environment, the bank will continue to improve its loss-absorption capacity and asset quality metrics. Moody’s also considers that, while large concentrated related-party and borrower risks continue to leave the bank susceptible to event risk related to the Dubai government and constrain the bank’s standalone rating, the Dubai economy and overall operating environment will remain broadly resilient despite the decline in oil prices.