Moody's on Aug. 9 downgraded United Arab Bank PJSC's long- and short-term deposit ratings to Baa3/P-3 from Baa2/P-2, and revised the outlook on the long-term deposit rating to stable from negative.

The agency also downgraded the bank's baseline and adjusted baseline credit assessments to "ba2" from "ba1." Also downgraded were the bank's long-term counterparty risk rating to Baa2 from Baa1 and the long-term counterparty risk assessment to Baa2(cr) from Baa1(cr).

The agency affirmed the United Arab Emirates-based bank's short-term counterparty risk rating at P-2 and its short-term counterparty risk assessment at P-2(cr).

The downgrade reflects the bank's weakening asset quality, amid ongoing pressure on small and mid-sized businesses from a soft economy. The stable outlook reflects the bank's improved capitalization, following the completion of a rights issue in March.