Sharjah Islamic Bank

Very strong, although eroding, capitalization. Adequate funding and liquidity. Strong relationship with the Emirate of Sharjah, its largest shareholder. High single-name lending concentrations. Limited footprint in the UAE banking segment. Limited earnings generation relative to peers'. Weakening asset quality amid challenging operating environment. S&P Global Ratings' outlook on United Arab Emirates-based Sharjah Islamic Bank (SIB) is stable. The outlook reflects our expectation that SIB's business profile as a small lender focused on the Emirate of Sharjah will remain unchanged, with no significant alterations to its financial profile over the next two years. We expect SIB's capitalization and earnings, including our risk-adjusted capital (RAC) ratio for the bank, to remain generally stable over the period. We would consider a negative rating

...Weakening asset quality amid challenging operating environment. Outlook: Stable S&P Global Ratings' outlook on United Arab Emirates-based Sharjah Islamic Bank (SIB) is stable. The outlook reflects our expectation that SIB's business profile as a small lender focused on the Emirate of Sharjah will remain unchanged, with no significant alterations to its financial profile over the next two years. We expect SIB's capitalization and earnings, including our risk-adjusted capital (RAC) ratio for the bank, to remain generally stable over the period. We would consider a negative rating action if our assessment of SIB's capitalization deteriorated. This would be due to our projected RAC ratio for the bank falling below 15%, due to an aggressive dividend policy or to earnings generation lagging behind balance-sheet growth. We could also downgrade the bank if we saw substantial deterioration in its asset quality. A positive rating action, although quite remote at this stage, could be triggered by...

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