FGB has $1.66bn debt maturities

Abu Dhabi-based First Gulf Bank (FGB) has nearly Dh6.1 billion ($1.66 billion) of debt maturities this year, said Fitch Ratings on Tuesday. “Around Dh6.1bn of FGB's medium-term funding matures in 2012 but Fitch believes that the bank has the capability to repay this without putting undue pressure on liquidity, either from its current resources or new debt issuance,” the global ratings agency said in a statement. FGB's funding remains reliant on relatively concentrated, but stable, customer deposits (mainly corporate and government-related), but the bank also has diversified medium-term funding. The bank successfully raised $1.15bn (Dh4.2bn) through two sukuk issues in August 2011 and January 2012. The bank's Fitch core capital ratio was sound at 16.7 per cent at end-2011. This does not include AED4bn of perpetual securities, classified as Tier 1, held by the Abu Dhabi government. Fitch also affirmed FGB’s Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook and Viability Rating (VR) at 'bbb-'. A full list of rating actions is at the end of this release. The bank's VR reflects the bank's sound and consistent profitability, the strength of its local franchise, sound capitalisation and adequate liquidity. It also reflects the bank's exposure to the stressed real estate sector in the UAE, which amounted to around 19 per cent of assets, and concentrations in loans and deposits. In 2011, FGB's net income (before minority interests) increased by 4.6 per cent, mainly the result of higher net interest income and lower net impairment charges. The bank's cost/income ratio was well-managed at 18.9 per cent, reflecting the bank's efficient use of its small branch network, alternative distribution channels and low staff numbers. Excluding the bank's exposure to Dubai World, which has been restructured and is now performing, the non-performing loan ratio stood at 4.0 per cent at end-2011. This ratio includes the bank's exposure to Dubai Holding, which is currently undergoing restructuring. Overall asset quality is expected to remain stable, despite continuing stress in the real estate sector. However, the bulk of the bank's real estate exposures are located in Abu Dhabi. In Fitch's opinion, any further impairments will be manageable. The bank's investment properties (5 per cent of total assets) are also mainly located in Abu Dhabi.