DUBAI, June 18 Fitch has cut HSBC Bank Middle
East's viability rating (VR) one notch because of asset
quality concerns, while keeping its long-term default rating at
'AA-', one notch below the main HSBC group.
Fitch said on Monday that HBME, the Middle Eastern arm of
HSBC, had reported "a substantial rise in renegotiated loans as
well as faster than previously anticipated new non-performing
loan (NPL) formation". It cut the VR rating to bbb from bbb+.
While the bank's NPL ratio remained near flat at 9.6 percent
at the end of 2011, Fitch said this was despite improved loan
recoveries and the reclassification of large NPLs in the United
Arab Emirates as performing. It also said NPLs would continue to
rise in 2012, albeit at a slower pace.
HSBC declined to comment.
Fitch also said revenue growth at HBME would be challenging
in 2012 due to reduced lending in the UAE and new regulations on
retail lending in a number of markets in which it operates.
HSBC has been restructuring its retail banking business in
the Middle East since late last year, making Dubai a regional
hub and scaling back its presence in other markets.
So far this month, it has received approval to merge its
Omani operations with Oman International Bank to create HSBC
Bank Oman - in which it has a 51 percent stake - while
the deputy chief executive of Turkish group Isbank
told Reuters it would buy HSBC's branches in Pakistan.