Moody's Investors Service has affirmed its A3 long and short term foreign and local currency issuer ratings of Dubai Islamic Bank (DIB) with a stable outlook, in line with the outlook of the UAE and Aa2 issuer rating.

The rating agency also affirmed DIB's baseline credit assessments (BCA) and adjusted BCA at ba2.

Additionally, Moody's also assigned a first-time rating of B2 to DIB's $750 million additional tier 1 capital certificates issued by DIB Tier 1 Sukuk, a funding vehicle incorporated in the Cayman Islands.

DIB will be acquiring Noor bank subject to regulatory and shareholder approvals and upon completion, the bank will remain as the operating entity and all the assets as well as liabilities of Noor bank will be transferred.

The acquisition of Noor Bank is expected to enhance DIB's position as the fourth largest bank in the UAE banking system and successful tie-up could lead in the medium term, to revenue synergies and cross-selling opportunities as well as cost synergies from economies of scale and expense consolidation.

Moody's stated that it expects the strong retail franchise of the merged entity to drive solid margins which will support profitability going forward.

Noor Bank is a much smaller entity and Moody's believes that its slightly weaker financial profile will not have material impact on the DIB's ba2 BCA.

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