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In October Capital Intelligence (CI), the international credit rating agency, announced that it has affirmed Abu Dhabi Commercial Bank's (ADCB) foreign currency ratings at ‘AA-' Long-term and ‘A1' Short-term with a Stable Outlook.
The agency said that the ratings reflect the majority shareholding by the government of Abu Dhabi as well as the bank's systemic importance given its large size and significant domestic presence.
ADCB is the third largest bank in the country with total assets of AED147bn ($40bn) at end 2008. The bank has a moderately large network of 39 branches, five kiosks and cash offices and 138 ATMs spread across the emirates. Around half the branches are located in Abu Dhabi.
ADCB offers a comprehensive range of retail and corporate banking products and services and over the years has built a strong customer franchise. Overseas operations, meanwhile, are limited to two branches in India and a 25 percent stake in RHB Bank, Malaysia.
CI believes that the bank would receive substantial support in case of need. Abu Dhabi Commercial Bank was created in 1985 by the government of Abu Dhabi through the merger of three distressed retail commercial banks. The government, through the Abu Dhabi Investment Council, owns 65 percent of the bank.
CI said the bank is confident of maintaining its margins this year, which could offset the fall in non-interest revenues.
However, earnings are likely to remain under pressure due to increased provision charges for loans and investments, including provisions on exposures to two large Saudi business groups which are currently experiencing financial difficulties.
NPLs have risen substantially over the end 2008 level, but the NPLs to gross loans ratio is still at a manageable level.
The agency said that the ratings reflect the majority shareholding by the government of Abu Dhabi as well as the bank's systemic importance given its large size and significant domestic presence.
ADCB is the third largest bank in the country with total assets of AED147bn ($40bn) at end 2008. The bank has a moderately large network of 39 branches, five kiosks and cash offices and 138 ATMs spread across the emirates. Around half the branches are located in Abu Dhabi.
ADCB offers a comprehensive range of retail and corporate banking products and services and over the years has built a strong customer franchise. Overseas operations, meanwhile, are limited to two branches in India and a 25 percent stake in RHB Bank, Malaysia.
CI believes that the bank would receive substantial support in case of need. Abu Dhabi Commercial Bank was created in 1985 by the government of Abu Dhabi through the merger of three distressed retail commercial banks. The government, through the Abu Dhabi Investment Council, owns 65 percent of the bank.
CI said the bank is confident of maintaining its margins this year, which could offset the fall in non-interest revenues.
However, earnings are likely to remain under pressure due to increased provision charges for loans and investments, including provisions on exposures to two large Saudi business groups which are currently experiencing financial difficulties.
NPLs have risen substantially over the end 2008 level, but the NPLs to gross loans ratio is still at a manageable level.
Pipe dreams
Posted by TALAL on 20 December 2009 at 18:19 UAE time
With all due respect the list in not only wrong but misleading as well. I agree with Paddy that you need to come up with more meaningful criteria for ranking Banks as this doesn't work at all. When new financial results are out next year at least 3 on the list may end up up the creek without a paddle.
Posted by TALAL on 20 December 2009 at 18:19 UAE time
With all due respect the list in not only wrong but misleading as well. I agree with Paddy that you need to come up with more meaningful criteria for ranking Banks as this doesn't work at all. When new financial results are out next year at least 3 on the list may end up up the creek without a paddle.
Agree with the list
Posted by SG, Kuwait, Kuwait on 9 December 2009 at 09:50 UAE time
I have been working in the corporate banking field for over 5 years now and the banks listed above are quite secure. Choosing randomly and checking the historic audited financials you will see that these banks have been taking adequate provisions over the years unlike banks like Commercial Bank of Kuwait that took extreme sudden provisions making them reporting losses in 3Q of 09 whereas KD100m for the same period the previous year; that goes to show the type of credit they run. As for all the questions Paddy is asking, well an article that answers all those questions might as well be a book cos you are asking for financial analyses of each bank which could easily need 100 pages or so (4 pages each minimum). This report is a morale booster but is based on financials issued by the best international auditors. and, by the way, i do not work in any of those top banks but i intend to.
Posted by SG, Kuwait, Kuwait on 9 December 2009 at 09:50 UAE time
I have been working in the corporate banking field for over 5 years now and the banks listed above are quite secure. Choosing randomly and checking the historic audited financials you will see that these banks have been taking adequate provisions over the years unlike banks like Commercial Bank of Kuwait that took extreme sudden provisions making them reporting losses in 3Q of 09 whereas KD100m for the same period the previous year; that goes to show the type of credit they run. As for all the questions Paddy is asking, well an article that answers all those questions might as well be a book cos you are asking for financial analyses of each bank which could easily need 100 pages or so (4 pages each minimum). This report is a morale booster but is based on financials issued by the best international auditors. and, by the way, i do not work in any of those top banks but i intend to.
Tangible evidence missing
Posted by Paddy, Dubai, UAE on 26 November 2009 at 00:04 UAE time
The report talks about the performance of each bank at a very high level without delving deep into the numbers. For example, what is the net NPL for each bank in comparison with their assets? What is the exposure ratio (total exposure to the risky sectors out of the total assets) of each bank to risky sectors like Credit Cards, Construction & Real Estate etc? What is the recovery position with respect to Credit Card advances? What is the exposure of each bank (especially UAE and Saudi banks) to the Saad and Algosaibi groups? Have they kept aside provisions against these troubled assets? What has each bank done differently to tide over the financial crisis? HAs there been any fresh capital infusion into any of these banks? What is the Capital Adequacy Ratio of these banks? The lack of transparency with regard to reporting in the Middle East financial sector means that the banks may not have fully reported their bad assets. Maybe the report is intended to be a morale booster to the general public and not exactly based on hard facts.
Posted by Paddy, Dubai, UAE on 26 November 2009 at 00:04 UAE time
The report talks about the performance of each bank at a very high level without delving deep into the numbers. For example, what is the net NPL for each bank in comparison with their assets? What is the exposure ratio (total exposure to the risky sectors out of the total assets) of each bank to risky sectors like Credit Cards, Construction & Real Estate etc? What is the recovery position with respect to Credit Card advances? What is the exposure of each bank (especially UAE and Saudi banks) to the Saad and Algosaibi groups? Have they kept aside provisions against these troubled assets? What has each bank done differently to tide over the financial crisis? HAs there been any fresh capital infusion into any of these banks? What is the Capital Adequacy Ratio of these banks? The lack of transparency with regard to reporting in the Middle East financial sector means that the banks may not have fully reported their bad assets. Maybe the report is intended to be a morale booster to the general public and not exactly based on hard facts.
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