By Andy Sambidge
Fitch Ratings says Abu Dhabi bank is still stronger than most of its rivals, assigns stable outlook
National Bank of Abu Dhabi's impaired loans grew to AED3.8bn in the first quarter of 2011 but remained stronger than that of its domestic rivals, Fitch Ratings has said.
The ratings agency affirmed NBAD's long-term issuer default rating (IDR) at AA- with a stable outlook, saying the bank's core profitability was "robust" despite a difficult 2010.
Fitch said loan quality weakened in 2010 and in Q1 2011 but remained stronger than many other banks in the UAE due to itsrelatively high proportion of government-related lending.
"Impaired loans rose to AED3.8bn at end-Q1 2011, a still reasonable 2.6 percent of the loan book...Fitch expects impaired loans to rise, albeit fairly moderately, for the remainder of 2011," Fitch said in a report.
It said liquidity remained sound, although NBAD's loan/deposit ratio is higher than most UAE peers.
"Despite the still difficult operating environment in the UAE in 2010, NBAD's core profitability proved robust...Core profitability should remain fairly strong for the whole of 2011 although it will remain constrained by high impairment charges," Fitch added.
NBAD is the largest bank in Abu Dhabi and the second-largest in the UAE, accounting for around 12 percent of system assets.
The Abu Dhabi government owns 70.5 percent of NBAD's shares through its domestic investment arm, the Abu Dhabi Investment Council (ADIC).finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.