National Bank of Umm Al Qaiwain maintains BBB+ rating from Capital Intelligence

The UAE’s National Bank of Umm Al Qaiwain (NBQ) has retained its long-term financial strength rating of BBB+, indicating trust in the bank’s general stability going into the future.

The bank received the rating from Capital Intelligence (CI), the international credit rating agency. CI’s rating reflects the National Bank of Umm Al Qaiwain’s strong capital adequacy ratio (CAR), liquidity and profitability going forward.

The report pointed to a few factors that prevented the bank from receiving an A rating. Weak asset quality is a major constraining factor, along with customer concentrations in loans and deposits, the small balance sheet size and the continuing high credit risks in an otherwise improving operating environment.

The bank’s access to federal government support from the UAE government underpins the resiliency of the bank. That support prompted CI to give NBQ a ‘Stable’ outlook on all ratings.

The bank’s CAR remains strong and is in fact the best among banks in the United Arab Emirates. Capital accounts for a large portion of the balance sheet, meaning the leverage ratio is low.

NBQ’s capital is sufficient to support a large increase in risk assets, though the bank maintains a cautious outlook and has no such growth plans for risk assets.

The bank also has strong liquidity ratios. Customer deposits and capital continue to be the primary sources of funding, which means the short-term interbank liabilities are negligible.