United Arab Bank (UAB) announced that Fitch Ratings has affirmed its Long-Term Issuer Default Rating (IDR) at ‘BBB+’ with a Stable outlook and upgraded its Viability Rating (VR) to ‘bb-‘ from ‘b+’.
The upgrade of the VR reflects the bank’s improved asset quality and profitability metrics, which Fitch expects to be sustained in the medium term, resulting from the bank’s loan book clean-up process, and tightening of underwriting standards, but also underpinned by favorable operating environment in the UAE.
The current upgrade to ‘bb-’ follows a similar one-notch improvement in the VR in April 2023 as well (from ‘b’ to ‘b+’).
Commenting on the announcement Mr. Shirish Bhide, Chief Executive Officer of UAB, said: “We are pleased with Fitch’s recent action to upgrade UAB’s viability rating which stems from their acknowledgment of UAB’s improved asset quality and profitability metrics, and tightened underwriting standards amidst a sector-leading growth in assets.”
He added, “The execution of our growth strategy is progressing well, including our plan to further enhance our capital position through the upcoming Rights Issue of up to AED 1.03 billion, recently approved by our shareholders general assembly. This Rights Issue will not only strengthen the Bank’s balance sheet by enhancing the ability to meet regulatory requirements and withstand unforeseen economic challenges, but also support us in achieving a balanced asset growth and sustained profitability.”
