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08 Aug 2011
Standalone credit strength raised to Baa3
London, 08 August 2011 -- Moody's Investors Service has today affirmed the D+ standalone bank
financial strength rating (BFSR) and the A2/Prime-1 long-term
and short-term debt and deposit ratings of First Gulf Bank PJSC
(FGB). At the same time, Moody's raised FGB's
standalone credit strength to Baa3 from Ba1 (mapped from the BFSR) and
revised the outlook on the ratings to stable from negative. These
changes reflect FGB's strong profitability, high capitalisation
levels and relatively solid asset quality, compared with its rated
peers.
RATINGS RATIONALE
Moody's says that FGB has emerged from the crisis with improved
capitalisation levels and has maintained its strong profitability and
relatively solid asset-quality ratios. FGB's efficient
business model benefits from low-cost deposits and high operational
efficiencies, whilst its association with Abu Dhabi's ruling
family, the private business sector and high-net-worth
individuals provides FGB with access to uninterrupted business opportunities
that enable it to continue to expand faster than the industry average.
The funding challenges that FGB faced in December 2008 --
when the negative outlook was assigned -- have also been
adequately addressed, with additional deposit growth and support
from the Abu Dhabi government and government-related institutions.
FGB has maintained its access to the debt-capital markets,
and was one of few banks that managed to issue debt during 2009 and 2011.
Based on our stress-test assumptions and expectations --
and given FGB's current capitalisation and profitability metrics
-- the D+ standalone bank financial strength rating
(BFSR), mapping to the upwardly revised Baa3 from Ba1 on the long-term
scale, is under no negative pressure. Moody's has therefore
revised the outlook to stable from negative. Consequently,
the outlook on FGB Sukuk Company Limited has also been revised to stable
from negative.
The ratings of FGB are supported by its D+ BFSR and additional government
support, leading to a four-notch uplift to A2 from the Baa3
standalone credit strength. The rating reflects FGB's expanding
franchise and its satisfactory financial fundamentals, which are
underpinned by its large capital base, strong profitability,
good asset quality and efficient control over its costs. However,
the rating is constrained by its limited geographical diversification
and significant lending and funding concentrations.
PREVIOUS RATING ACTION & METHODOLOGIES USED
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The principal methodologies used in this rating were Bank Financial Strength
Ratings: Global Methodology published in February 2007, and
Incorporation of Joint-Default Analysis into Moody's Bank Ratings:
A Refined Methodology published in March 2007. Please see the Credit
Policy page on www.moodys.com for a copy of these methodologies.
Headquartered in Abu Dhabi in the United Arab Emirates (UAE), First
Gulf Bank reported total assets of AED149.229 billion (USD40.551
billion) as at 30 June 2011.
DIFC - Dubai
John Tofarides
Analyst
Financial Institutions Group
Moody's Investors Services Limited, Dubai Branch
Telephone: 00971 4237 9536
London
Yves Lemay
MD - Banking
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's affirms First Gulf Bank at A2/P-1/D+; outlook changed to stable from negative
No Related Data.
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