Fitch has cut HSBC Bank Middle East's viability rating (VR) one notch because of asset quality concerns, while keeping its long-term default rating at 'AA-', one notch below the main HSBC group.
Fitch said on Monday that HBME, the Middle Eastern arm of HSBC, had reported "a substantial rise in renegotiated loans as well as faster than previously anticipated new non-performing loan (NPL) formation". It cut the VR rating to bbb from bbb+.
While the bank's NPL ratio remained near flat at 9.6 percent at the end of 2011, Fitch said this was despite improved loan recoveries and the reclassification of large NPLs in the United Arab Emirates as performing. It also said NPLs would continue to rise in 2012, albeit at a slower pace.
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