Fitch affirms Emirates Bank

Fitch Ratings said it affirmed the Emirates Bank International's ratings at long-term issuer default A+ and short-term issuer default F1. The support rating floor is unchanged at A+.

The outlook is stable.

The ratings reflect the high probability of support from the United Arab Emirates authorities if needed. Fitch also noted the issuer's consistent profitability and asset quality. The rating also reflects adequate liquidity and capitalization, rapid loan growth and reliance on a relatively undiversified domestic market.

In the first quarter, the Emirates Bank and the National Bank of Dubai announced a proposed merger, which could create the largest banking group in the Gulf, with greater scale, franchise and competitive position.

Fitch said market risks remain within tolerable limits. Funding is diversified through the capital markets and capitalization is adequate, although the Fitch eligible capital ratio has declined to 12.4% at the end of 2006 due to loan growth. The bank's capital adequacy ratio was 15.6%, supported by an issue of $500 million subordinated notes.

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