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RAM Ratings assigns AAA/Stable/P1 ratings to ADIB

February 6, 2014

RAM Ratings has assigned AAA/Stable/P1 financial institution ratings to Abu Dhabi Islamic Bank PJSC (ADIB or the Bank). The ratings are underpinned by the strong likelihood of government support given the Bank's ownership structure, established franchise and role of spearheading Islamic banking in Abu Dhabi , according to CPI Financial. Established under an Emiri Decree, ADIB has a strong franchise in Islamic banking and is the largest Islamic bank in Abu Dhabi despite its mid-sized stature. The Bank is majority-owned by members of the Abu Dhabi ruling family (48 per cent) and the Abu Dhabi Investment Council (8 per cent). Support for the Bank had been clearly demonstrated through capital infusions from the Government of Abu Dhabi and the UAE Federal Government during the global financial crisis. Notably, ADIB's asset quality remains pressured by its sizeable exposure to the real-estate sector and legacy financing, besides some borrower-concentration risk. While the real-estate sector is recovering, it is still generally soft. Its gross impaired-financing ratio remained high at 7.3 per cent as at end-September 2013 , albeit better than the peak of 9.6 per cent as at end-June 2011 . The Bank's strong financing growth in recent years also draws some concern over the seasoning of its portfolio. However, the Bank's healthy profit-generating aptitude and capitalisation are expected to provide a sufficient cushion against potential credit losses. ADIB's favourable funding profile characterised by a high proportion of stable retail deposits with a comfortable financing-to-deposits ratio is also a credit positive. Cheap funding in the form of current- and savings-account deposits came up to a sizeable 53.0 per cent while its financing-to-deposits ratio stood at a comfortable 83.9 per cent as at the same date (industry: 91 per cent).; All Rights Reserved - Mubasher Info

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Source: Mubasher (Saudi Arabic)

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