Capital Intelligence (CI), the international credit rating agency, has reduced the foreign currency long-term rating and the financial strength rating of MashreqBank from A+ to A-.

The move comes in view of the increase in non-performing loans (NPLs) this year (reflecting the classification of exposures to the Saad and Al Gosaibi groups and higher retail bad debts) and the declining NPL coverage ratio, said a statement.

The bank’s net profit and return on average assets are also expected to fall due to a substantial increase in the loan loss provision charge this year. The bank’s significant exposures to Dubai government entities and the deteriorating operating environment in the emirate are other constraining factors, according to the statement.

The bank’s short-term foreign currency rating is maintained at A1, while the support rating is unchanged at 3.

Given the bank’s large size and its systemic importance, Capital Intelligence believes that it is very likely to receive official support in case of need, it said in the statement.

Key factors supporting the rating are the bank’s solid capital adequacy ratio and good liquidity, while MashreqBank’s high non-interest revenues continue to contribute to its strong operating profitability, according to the statement.

A stable outlook is appended to all the ratings, the statement concluded. – TradeArabia News Service