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Thursday, 20 July 2017

Fitch Revises Dunia's Outlook to Negative; Affirms IDR at 'BB'

Fitch Revises Dunia's Outlook to Negative; Affirms IDR at 'BB':

"(The following statement was released by the rating agency) LONDON, July 20 (Fitch) Fitch Ratings has revised Dunia Finance LLC's (Dunia) Outlook to Negative from Stable while affirming the company's Issuer Default Ratings (IDR) at Long-Term 'BB' and Short-Term 'B'. The Outlook revision reflects weakening asset quality, which negatively affected Dunia's profitability in 2016. Fitch expects Dunia's asset quality metrics to remain under pressure throughout 2017. Dunia is a UAE-based finance company, offering smaller-ticket, predominantly unsecured loans, with a particular franchise among salaried expatriates from emerging markets. KEY RATING DRIVERS IDRS The IDRs reflect the balance between the significant exposure of Dunia to credit risk arising from its unsecured lending and the moderate (by finance company benchmarks) leverage under which it operates. Dunia's net impairment charge has approximately doubled in each of the last two years as job losses and wage pressures constrained borrowers' repayment capacities. Simultaneously, loan growth slowed markedly to -2% in 2016 from 34% in 2015 and 47% in 2014. With impairment charges absorbing a materially higher proportion of revenue (72% in 2016, up from 40% in 2015 and 29% in 2014), Dunia's pre-tax profit dropped 67% in 2016 to AED71 million (2015: AED217 million). "

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