First Abu Dhabi Bank PJSC

The stable outlook reflects our expectation that, over the next 12-24 months, FAB's management will contain potential risks associated with its lending book and continue to support strong capitalization, bolstering its ability to absorb losses. A negative rating action on FAB over the next 12-24 months is remote since it would require a three-notch deterioration of the bank's intrinsic creditworthiness, which assumes a simultaneous and significant weakening of asset-quality indicators, capitalization, and profitability. Pressure on the bank's intrinsic creditworthiness could emerge, however, if we observe a significant increase in the bank's risk appetite. We could also lower the rating in the unlikely scenario that we were to downgrade Abu Dhabi (AA/Stable/A-1+) or if we viewed the support of the Abu

...S&P Global Ratings expects First Abu Dhabi Bank PJSC (FAB)'s franchise-reinforcing operating performance will continue but a greater contribution from investment banking activity as management seeks to diversify its revenue base. FAB's first-half 2023 operating results built on previous quarters' very strong performance, with record net profit and operating income. Ultimately, we expect this to bolster the bank's strong core credit characteristics. However, we also note the re-emergence of revenue sources we typically view as less stable. The lion's share of gains were accounted for by a higher-rate-influenced net interest margin (NIM), but also an increased component of foreign exchange and investment gains, which previously boosted results in 2021, when lending growth was pressured. Lending growth was slightly below system levels over the first half, in contrast to FAB's substantial market outperformance over the past two years. While the bank seeks to diversify its revenue base with...

Full Report