Fitch upgrades UAB’s VR to ‘b+’ and affirms IDR at ‘BBB+’

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 ‘b+’ from ‘b’.

The upgrade of the VR reflects the improved business profile following the asset quality clean up and new strategy, improvements in asset quality and coverage of impaired loans, a recovery in profitability metrics after material losses, and stronger capital buffers.

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 from ‘b’ to ‘b+’ which stems from their acknowledgment of UAB’s “improved business profile following the asset quality clean up and new strategy, improvements in asset quality and coverage of impaired loans, a recovery in profitability metrics after material losses, and stronger capital buffers”.

Given the strength and quality of our management team, the now significantly augmented Tier 1 capital and strong levels of liquidity, we remain confident of being able to further enhance our market share through the systematic implementation of our strategic and financial plans.”

He added: “We are moving swiftly forward with our strategic and financial plans, and we expect this to have a positive impact on our growth and profitability in the future.”

Last week United Arab Bank (UAB) reports its financial results for the quarter ending March 31st, 2023. UAB posted a net profit of Dhs54.8 million for Q1 of 2023, compared to a net profit of Dhs30.4 million in Q1 2022 representing an increase of 80 per cent. The growth in net profit is a result of improved Net Interest Income and lower provision charges.

UAB’s financial performance was aided by a significant progress within the ‘core’ businesses recording 5 per cent growth in its total operating income in Q1 of 2023 as compared to Q1 of 2022 driven by 38 per cent increase in net interest income. Provision charges have significantly reduced by 91 per cent in Q1 of 2023 as compared to Q1 of 2022 as the bank improved its portfolio underwriting in higher quality assets and achieved higher recoveries.

The bank was able to increase its capital base in Q1 of 2023 by a total of $150m through the issuance of AT1 capital instrument which has strengthened the Bank’s capital adequacy ratio (CAR) which increased to 19.3 per cent and boosted its Tier 1 Capital ratio which recorded 18.1 per cent, both of which are well above the applicable regulatory requirements.

WAM