Dubai - Arabstoday
Fitch Ratings has affirmed Emirates NBD\'s (ENBD) long-term issuer default rating at ‘A+\' and viability rating at ‘bbb\'. The rating agency has removed the bank\'s via-bility rating from rating watch negative and said it believes that there is high probability of support from the UAE authorities and Dubai to Emirates NBD. Following the global financial crisis, liquidity support and term funding were provided by the UAE authorities to all banks in the system. In addition, the government of Dubai injected Dh4 billion of perpetual hybrid Tier 1 capital into Emirates NBD in June 2009 to provide further support to the bank\'s capital base. \"The bank\'s viability rating has been affirmed and removed from negative watch as Fitch believes that the bank has sufficient operating revenues to absorb any need for further loan impairment charges, without having any adverse impact on the bank\'s capital base,\" Fitch said in a rating update on Monday. Article continues below Analysts said the bank\'s improved rating is likely to speed up its plans to raise funds though a medium term (MTN) notes programme depending on market conditions. The bank\'s funding requirements are predominantly met from customer deposits. But the bank has been an active user of the capital markets in the past. The bank\'s chief executive Rick Pudner told reporters recently that although the bank\'s debt maturity profiles are within its existing funding capacity it is watching the market for alternate funding options through medium term bond issuance. Market conditions \"We are constantly reviewing the market conditions, but we still feel that the pricing is on the higher side. We are looking at opportunities especially in the context of upcoming funding requirements in the next two to four years,\" said Pudner. The bank\'s impaired loans ratio improved by 1.1 per cent during the period resulting primarily from de-recognition of a previously impaired corporate account due to the finalisation of the facility\'s restructuring on commercial terms. While the impairment charge in the first half of 2011 increased to Dh2.35 billion compared with Dh1.74 billion the first half of 2010, this was primarily driven by a conservative addition of Dh1.6 million to portfolio impairment allowances during the first half of 2011 to cover future contingencies. \"The current level of impaired loans, reserve coverage and loan concentration continues to be a concern. Any significant deterioration could lead to a downgrade of the viability rating,\" said Philip Smith an analyst with Fitch. Net income of the bank in the first half was up 43 per cent, benefiting from the bank\'s core profitability and Dh1.8 billion of non-recurrent gains arising from the sale of a 49 per cent stake in its subsidiary Network International and revaluation at fair value of the 51 per cent stake retained by the bank.