Moody's Upgrades Emirates NBD Bank's Credit Ratings Due to Improved Asset Quality and Government Support

Strategic Insights -

Emirates NBD Bank PJSC (ENBD) has seen a significant upgrade in its credit ratings by Moody's Investors Service, driven by sustained improvements in asset quality, solid profitability, and strong capital. The long-term deposit and senior unsecured ratings have been upgraded to A1 from A2, while the bank's short-term deposit ratings remain at P-1. Moody's also upgraded the bank's Baseline Credit Assessment (BCA) to baa2 from baa3, citing the bank's further reduction in related-party credit concentration and strong liquidity buffers.

Key Takeaways:

  • Moody's upgraded Emirates NBD Bank's long-term deposit and senior unsecured ratings to A1 from A2, citing improved asset quality, solid profitability, and strong capital.
  • The bank's Baseline Credit Assessment (BCA) was upgraded to baa2 from baa3, driven by sustained improvements in asset quality, reduced related-party credit concentration, and strong liquidity buffers.
  • ENBD's stage 3 loans reduced to 3.1% as of March 2025 (4.6% as of December 2023), with loan loss reserves remaining ample at 158.2% of the bank's existing stock of problem loans.
  • The bank's foreign-currency senior unsecured MTN and subordinate MTN program ratings were upgraded to (P)A1 and (P)A3 from (P)A2 and (P)Baa1, respectively.
  • ENBD's reported tangible common equity to risk-weighted assets stood at a solid 16.3% as of December 2024 (15.6% as of March 2025), with a conservative dividend payout track record and moderate credit growth expected.
  • The bank's stable outlook reflects its strong funding and liquidity, solid profitability, and a diversified funding base, underpinned by an established deposit-gathering franchise and dominant retail footprint.

Statistics:

  • ENBD's stage 3 loans: 3.1% as of March 2025 (4.6% as of December 2023)
  • Loan loss reserves: 158.2% of the bank's existing stock of problem loans as of March 2025
  • Tangible common equity to risk-weighted assets: 16.3% as of December 2024 (15.6% as of March 2025)
  • Foreign-currency senior unsecured MTN and subordinate MTN program ratings: (P)A1 and (P)A3 from (P)A2 and (P)Baa1, respectively

Sources:

  • Moody's Investors Service - "Moody's upgrades Emirates NBD Bank PJSC's ratings due to improved asset quality and government support" (2024)
  • Moody's Investors Service - "Banks" (November 2024) - available at https://ratings.moodys.com/rmc-documents/432741