Moody’s upgrades NBAD’s financial strength

Moody’s the international rating agency has upgraded to ‘C’ from ‘C-’ the financial strength of National Bank of Abu Dhabi, based on the bank’s improving financial fundamentals.

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By  Massoud Derhally Published  September 2, 2003

Moody’s the international rating agency has upgraded to ‘C’ from ‘C-’ the financial strength of National Bank of Abu Dhabi, based “on the bank’s improving financial fundamentals with increasing earning power, a satisfactory asset quality and an adequate capital position”.

The rating agency said the management’s increased focus on the level and quality of earnings resulted in a significant improvement in NBAD’s earning power in recent years and marked improvement in pre-provision profitability reflects the significant increase in fee and commission income, in line with the bank’s revenue diversification policy.

Furthermore, a contained operating cost growth, coupled with a higher growth in operating revenues, has led to significant improvement in operational efficiency, boosting further the bank's earning power. The bank continues to have an adequate capital position, high enough to support its planned business growth over the medium term.

While the rating agency said its upgrade recognised the franchise diversification efforts undertaken by NBAD during recent years and the results achieved so far, it also said this relationship means the bank’s franchise remains relatively undiversified from both customer and revenue point of view, while its deposit base fluctuates significantly due to large flows of government and government-related deposits.

Still, NBAD received top marks for reducing its reliance on government-related business by growing and developing new business opportunities in the domestic market and in the region.

‘C’ category for financial strength is third on Moody’s five-category scale.

NBAD’s deposit ratings remained at the UAE country’s ceiling of A2/Prime-2 for foreign currency deposits, and the outlook on the financial strength rating is stable. According to the rating agency, NBAD had total assets of US $10.6 billion dollars as of 31 December 2002.

NBAD announced $ 107 million in unaudited net profit for the first half of 2003, a 19% increase from $90 million in the same period in 2002.

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