S&P assigns investment grade rating to Emirates Development Bank

Stable outlook reflects the lender's strong capital base underpinned by UAE federal government backing, ratings agency says

The Abu Dhabi Convention & Exhibition Bureau (ADCEB), part of the Department of Culture and Tourism – Abu Dhabi (DCT Abu Dhabi), Abu Dhabi National Exhibitions Company (ADNEC) and the Emirates Medical Association (EMA) have announced the renewal of their MoU to support the development of Abu Dhabi as a leading medical meetings hub.
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S&P Global Ratings has assigned an "AA-" investment grade rating to the UAE-owned Emirates Development Bank, citing the strength of its capital base and expected growth in its lending operations.

The stable outlook reflects the rating agency’s view of the credit standing of the country's federal government, EDB said on Monday.

The bank, which was also assigned a "gcAAA" long-term GCC regional scale rating by S&P, is well-positioned for growth. It has committed to maintain a robust capital base backed by the federal government.

“The ratings play a very important step for EDB’s future strategy and aspirations,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and EDB chairman.

This rating also “reinforces the bank’s position and ability to mobilise financial resources” and expand its funding and loans operations as it plays its part in the UAE’s economic diversification, he said.

S&P’s rating action comes after Fitch Ratings affirmed "AA-" issuer default ratings with a stable outlook for EDB last month.

The rating agency said it “believes EDB is well positioned for growth” and has “good access to various funding and liquidity sources”.

“EDB has also been authorised by the government to issue bonds on behalf of other federal entities within the overall borrowing plan of $5 billion,” said S&P.

“However, there are no current plans to do so.”

The lender, which was founded in 2011 through the merger of Emirates Industrial Bank and the Emirates Real Estate Bank, aims to provide Dh30 billion ($8.17bn) in financing over the next five years over the next five years to support the UAE's efforts to strengthen its industrial sector. It plans to fund industries such as health care, infrastructure, food security and technology and help to create 25,000 jobs during the period.

The UAE, the Arab world’s second-biggest economy, unveiled Operation 300bn – a strategy to raise the industrial sector's contribution to gross domestic product from Dh133bn to Dh300bn by 2031.

This involves the creation of about 13,500 new companies in the industrial sector measures to raise industrial research and development spending from 1.3 per cent to 2 per cent of GDP by 2031.

“The ratings are a major milestone and recognition of EDB’s strong financial profile, as well as an endorsement of its prudent future growth plans and sound risk management practices,” said Ahmed Al Naqbi, who took over as chief executive of EDB in May.

The lender said it will continue to follow its “new strategic mandate” to support the UAE’s diversification through the funding of individual clients, small and medium enterprises and companies in priority industrial sectors in the UAE.

EDB revealed plans in April to partner with five banks to boost lending and raise the growth of the country's industrial sector.

Last week, it signed an agreement with Commercial Bank of Dubai to offer credit guarantees and co-lending to SMEs in priority sectors.