Standard & Poor's Ratings Services today said it lowered its long- and short-term counterparty credit ratings on Abu Dhabi Commercial Bank (ADCB) to 'A-/A-2' from 'A/A-1'. The outlook is stable.
"The downgrade reflects our view that ADCB's credit measures have continued to deteriorate beyond our earlier expectations and relative to those of similarly rated peers," said Standard & Poor's credit analyst Goeksenin Karagoez.
The bank's large proportion of construction and real estate (CRE) loans, its exposure to Dubai World (DW), and its high single-party concentration increases the challenges it faces, and in our view, is hindering management's ability to tackle problems. Moreover, at 5.4% after adjustments, our estimate of ADCB's risk-adjusted capital (RAC) ratio suggests a much weaker capitalization and capacity for unexpected losses than similarly rated peers. In addition, internal capital generation remains weak.
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