Al Hilal Bank to issue Sukuk by the end of the year following robust ratings by Fitch and Moody’s - IFN

Al Hilal Bank to issue Sukuk by the end of the year following robust ratings by Fitch and Moody’s

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UAE: Shariah compliant Al Hilal Bank has announced its plans to kick-start its US$2.5 billion bond program through the issuance of a US$500 million Sukuk. According to sources, the Abu Dhabi-based Islamic bank will be utilizing proceeds from the Sukuk to fund general business purposes such as liquidity management and domestic expansion within the emirate. A day prior to the announcement, Al Hilal was assigned a debut rating of ‘A1’ and ‘A+’ by Moody’s and Fitch respectively, with both ratings carrying a stable outlook. In a statement on the ratings action, Mohamed Jamil Berro, the CEO of Al Hilal said: “The ratings mark a significant milestone in Al Hilal Bank’s history and stand testimony to the bank’s philosophy of responsible growth. The outcome emphasizes the bank’s stance towards robust risk management, continuous infrastructure enhancement as well as relentless focus on innovation and excellence.” Mohamed also conveyed that the company looks to open a few branches in the UAE over the next five years but would be more focused on technological expansion such as mobile banking services. Moody’s issuer rating of ‘A1/Prime-1’ and a baseline credit assessment of ‘ba2’ reflects the bank’s growing Islamic franchise in the emirate, solid asset quality and coverage metrics as well as its advanced management and information systems. Similar to Moody’s, Fitch has assigned robust ratings to Al Hilal’s long-term foreign currency issuer default rating at ‘A+’ and a viability rating of ‘bb-’. The ratings were mainly driven by the high probability of support from the UAE authorities and the Abu Dhabi government as the bank is 100% owned by the Abu Dhabi Investment Council, an investment arm of the UAE. Fitch also cited the bank’s high concentrations in its financing book and customer deposit base, as well as its improving profitability and satisfactory capitalization as reasons for the strong ratings. Incorporated in 2008, Al Hilal is currently the third-largest Islamic bank in the UAE with a total revenue of AED1.8 billion (US$489.92 million) and a net profit of AED310 million (US$84.37 million) registered last year. Based on the bank’s financial statement, total profits for the first half of 2013 stood at AED217.42 million (US$59.17 million) indicating an accretion of 39.8% from AED 93.61 million (US$25.47 million) in the corresponding period last year. Al Hilal’s assets on the other hand, stood at AED34.24 billion (US$9.32 billion) as at June 2013, recording an increase of 3.19% from AED32.12 billion (US$8.74 billion) in December 2012. According to a statement from the bank, the ratings are the highest to be awarded to an Islamic bank in the UAE.