Commercial Bank International has received its first rating from a major credit agency, a move that will help the lender to attract business and allow it to borrow money at better rates.
The Dubai-based bank, in which Qatar National Bank has the single biggest stake, said that the rating agency Fitch had put the bank firmly in the investment grade category, assigning it a long-term issuer default rating of A-, the seventh highest rating.
Mark Robinson, the chief executive, said that the bank had no immediate plans to raise debt on capital markets but may do so during the next couple of years.
“There are investors who will only buy securities issued by a rated entity and you couldn’t really go to the market frankly as an unrated bank in this part of the world, probably any part of the world,” Mr Robinson said in an interview.
“Now that we’re a rated bank that gives us access to the capital markets that we wouldn’t have had before, it helps us with major depositors for whom they need to deal with a rated bank, it will help us on trade transactions, sometimes our customers will insist on being beneficiaries of a letter of credit issued by a rated bank. So there’s some of that business that we wouldn’t have been able to get before.”
The rating makes Commercial Bank International one of 10 banks in the UAE that have a rating above BBB+, two notches above the lowest investment grade at Fitch.
Mr Robinson said he had no immediate plans to approach the other two major global rating agencies, Standard & Poor’s and Moody’s, for a rating.
The credit rating announcement came as the bank released its first-quarter earnings. Net income rose marginally to Dh36.5 million in the first three months of the year from last year, despite the crash in oil prices and the consequent slowdown in economic growth in the UAE.
Unlike the majority of UAE banks where earnings sank in the first quarter because of higher amounts of cash set aside for bad debt, Commercial Bank International underwent a massive balance sheet clean-up last year and had a decrease of provisions year-on-year in the first quarter.
Last year, the bank reduced its non-performing loans by Dh1.38 billion to Dh983m. Most of the reduction in non-performing loans was done during the fourth quarter of last year when the drop in the price of oil was the steepest.
Qatar National Bank owns a 40 per cent stake in Commercial Bank International.
Follow The National’s Business section on Twitter