UAE. Standard & Poor's Ratings Services' outlook on United Arab Emirates-based Abu Dhabi Commercial Bank (ADCB) is stable.

It reflects our expectation that ADCB will remain a major player in the UAE, with no significant change in its business and financial profiles over the next 12 to 24 months.

We anticipate that ADCB's capital and earnings will remain stable, and project that our risk-adjusted capital (RAC) ratio before adjustments for ADCB will reach more than 12% in the next 18 to 24 months. We could lower the ratings on ADCB if we perceived deterioration in its capitalization or risk position.

 If the bank's RAC ratio before adjustments were to decline below 10%, we would revise our capital and earnings assessment to "adequate" from "strong," which in turn would result in a lowering of our assessment of ADCB's stand-alone credit profile (SACP) and, in turn, of the ratings on ADCB.

Similarly, if we saw an unexpected deterioration in ADCB's asset quality, we would revise our assessment of its risk position to "moderate" from "adequate," which would prompt a lowering of the SACP and the ratings on ADCB.

A positive rating action, although remote at this stage, would likely result from a major improvement in our assessment of the bank's financial profile. A material improvement in ADCB's asset quality, accompanied by a significant contraction in loan loss charges, and pronounced improvement in capitalization could prompt us to change this assessment.

We would only raise the long-term rating on ADCB, though, if we revised the bank's SACP to 'a-', all other things being equal.

Strengths:

-- High systemic importance in the United Arab Emirates (UAE).

-- Majority ownership by, and privileged relationship with, the government of the Emirate of Abu Dhabi.

-- Solid domestic commercial position, translating into above-average operational efficiency.

-- Strong capitalization.

Weaknesses:

-- High concentration risks on both sides of the balance sheet.

-- Challenging, though improving, operating conditions in the UAE.

-- Sizable lending exposure to restructured Dubai World.

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