Bloomberg News

Emirates NBD Placed on Negative Watch at Fitch on Loan Losses

October 26, 2011

Oct. 26 (Bloomberg) -- Emirates NBD PJSC, the United Arab Emirates’ biggest bank, was placed on watch at Fitch Ratings for a possible downgrade on concerns about a rise in bad loans due to a weak property market and the global economy.

Even though Emirates NBD’s impaired loans ratio of 12.9 percent at the end of September was within the bank’s guidance of 13 percent to 14 percent, Fitch “has increasing concerns that retail, private-sector corporate and Islamic lending is deteriorating faster than previously anticipated,” the ratings company said in an e-mailed statement today. Emirates NBD said Oct. 24, while announcing its quarterly results, it expects its impaired loan ratio to peak at 15 percent to 16 percent in 2013.

Fitch said it will decide on a ratings cut over the next six months after the bank publishes its annual results, which may spark a downgrade of one or two levels. Emirates NBD’s ratings are backed by the “extremely high probability of support from the Dubai government and the U.A.E. authorities, given the bank’s systemic importance,” the statement said.

Emirates NBD is rated A+ by Fitch, its fifth-highest investment grade.

--Editors: Steve Bailey, Jon Menon

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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