Moody’s has affirmed its A3 local and foreign currency long-term as well as short-term issuer ratings of Sharjah Islamic Bank (SIB), with a negative outlook.
The rating agency also affirmed its baa3 ratings on the bank’s baseline credit assessment (BCA) and adjusted BCA.
Moody’s stated that the change in outlook to negative from stable reflects weakening core capital buffers, the bank’s relatively weak asset risk profile and modest profitability due to margin pressure.
The rating reflects the bank’s healthy liquid profile and continued expectation of the probability of support from the UAE, which is rated at Aa2, with a stable outlook.
The bank remains largely deposit-funded which accounted for 59 per cent of total assets as of March 2019. However, although SIB shows a high reliance on market funding, which tends to be confidence and price sensitive, the Sukuk portion of the bank’s market funding helps diversify its funding base as well as improve asset-liability maturity mismatches.
SIB’s market funding at 27 per cent of its tangible banking assets as of March 2019 reflects issuances from the bank’s $3 billion trust certificates issuance programme as well as interbank funding.
Source: Islamic Business and Finance