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First-time ratings of A3/P-2/D reflect bank’s sound financial fundamentals


Dubai Bank, a Dubai Group company, was recently assigned a long-term rating of A3 with positive outlook, as well as a short-term local and foreign currency rating of Prime-2 from Moody’s Investors Service.
 
The ratings reflect Dubai Bank’s robust risk management, its small but fast-growing franchise and its sound financial fundamentals, which are underpinned by the bank’s large capital base, sound asset quality, good liquidity and efficient control over its costs. Moody’s also considers the probability of Dubai Bank receiving systemic support from UAE authorities and the main shareholders in case of need as very high.
 
Commenting on the ratings, Dubai Bank CEO, Salaam Al Shaksy, said, “This is the first time that Dubai Bank has received a rating from Moody’s, and according to the assessors, the outlook on all of Dubai Bank’s ratings is currently positive. With the incredible growth that the bank has undergone in the past years, we are extremely pleased with the outcome of this assessment, and we look forward to continuing to improve our performance and ratings in the future.”
 
The positive ratings reflect Moody’s expectations that the bank would benefit from its significant expansion plans, along with further operating diversification to create a more robust franchise in an increasingly competitive operating environment, while maintaining an acceptable risk profile. Dubai Bank also stands to benefit, according to the ratings, from maintaining its strong financial performance while diversifying its portfolio.
 
While the robust credit growth and reliance on the corporate market exposes the bank to greater credit risk, Moody’s recognised that Dubai Bank’s credit quality is currently good and that delinquent loans are small and have been fully provided for. Dubai Bank’s retail banking franchise is growing, and Moody’s expects the bank’s retail profit and the fee business it will generate to continue to grow.
 
Ahmed El Shall, Dubai Bank CFO, said, “Since our conversion to an ethical and Shari’a-compliant financial institution last year, we at Dubai Bank have worked hard to maintain and improve our financial status and performance. These positive ratings are proof that we are moving in the right direction. We are confident that as we continue to follow our strategic expansion plan these ratings will continue to improve and demonstrate Dubai Bank’s financial security and stability to both our shareholders and the public.”
 
Shortly after its conversion to an ethical and Shari’a-compliant financial institution in January 2007, Dubai Bank launched its accelerated growth strategy. Since that time, the bank has witnessed exponential growth, with the number of fully-operating, strategically-located branches increasing from only five in 2006 to the current total of 20, situated throughout the UAE.

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