Database 04 — Policy & Strategy Engine

Credit Policy Sections

1.0 General Principles

2.0 Lending Criteria

3.0 CRE Financing Guidelines

4.0 Concentration Limits

5.0 Collateral Standards

6.0 Approval Authorities

7.0 Covenant Framework

8.0 Exceptions & Escalation

1.0 General Credit Principles

Version 3.2 · Effective 01 January 2026 · Approved by Credit Committee

1.1 Purpose and Scope

This Credit Policy establishes the principles, standards, and guidelines governing SmartAgentBank's credit activities across all business lines. It applies to all credit decisions, including new originations, renewals, amendments, and restructurings of credit facilities exceeding €500,000.

1.2 Credit Culture

The Bank maintains a conservative credit culture with a preference for secured lending, strong covenant packages, and borrower relationships where the Bank holds a primary banking position. All credit decisions must be based on a thorough assessment of repayment ability, rather than reliance on collateral alone.

1.3 Minimum Credit Standards

Parameter	Standard	Exception Permitted
Minimum Internal Rating	BB– (Grade 8)	Yes, up to B+ with CRO approval
Maximum LTV (CRE)	70%	Yes, up to 80% with Credit Committee
Minimum DSCR	1.25x	Yes, 1.15x with enhanced monitoring
Minimum Equity Contribution	25%	No
Maximum Tenor (CRE)	10 years	Yes, up to 15 years for Grade A assets
Minimum Loan Size	€2m	No
Maximum Single Borrower	10% of Tier 1 Capital	No — regulatory limit

2.0 Lending Criteria

Version 3.2 · Effective 01 January 2026

2.1 Borrower Assessment

All borrowers must be assessed on the basis of the five pillars of credit analysis: Character, Capacity, Capital, Conditions, and Collateral (5Cs framework). The assessment must be documented in a formal Credit Memorandum and reviewed by an independent credit officer for transactions above €5m.

2.2 Financial Analysis Requirements

A minimum of three years of audited financial statements is required for all new corporate borrowers. Financial projections covering the full loan tenor must be stress-tested under three scenarios: base case, downside (–20% revenue), and severe downside (–35% revenue).

2.3 Rating Requirements

Facility Size	Required Rating Model	Override Authority
€0.5m – €5m	SME Rating Tool	Regional Credit Officer
€5m – €25m	Corporate Rating Model	Senior Credit Officer
€25m – €100m	Corporate Rating Model + Expert Assessment	Chief Risk Officer
> €100m	Full Rating Panel	Credit Committee

3.0 CRE Financing Guidelines

Version 3.2 · Effective 01 January 2026

3.1 Eligible Property Types

The Bank finances Grade A and B commercial real estate including: Office (primary locations), Logistics/Industrial (modern facilities), Retail (non-secondary), Residential (portfolio lending only), Hotel (limited to 4-star+ branded), and Mixed-Use. Residential development finance is subject to a separate policy.

3.2 CRE-Specific Underwriting Standards

Property Type	Max LTV	Min DSCR	Min WAULT	Max Vacancy at Close
Office — Prime	65%	1.30x	3 years	15%
Office — Secondary	55%	1.40x	4 years	10%
Logistics / Industrial	65%	1.25x	4 years	10%
Retail — High Street	60%	1.35x	5 years	5%
Retail — Shopping Centre	55%	1.40x	5 years	5%
Hotel — Branded	60%	1.50x	N/A	N/A
Residential Portfolio	70%	1.20x	N/A	5%

4.0 Concentration Limits

Version 3.2 · Effective 01 January 2026

4.1 Sector Concentration Limits

Sector	Max % of Loan Book	Current Actual	Headroom	Status
Commercial Real Estate	40%	34.2%	5.8pp	✓ OK
Industrial	20%	18.1%	1.9pp	⚠ Near Limit
Technology	15%	9.4%	5.6pp	✓ OK
Retail Trade	10%	7.8%	2.2pp	✓ OK
Hospitality	8%	6.1%	1.9pp	⚠ Near Limit
Energy	10%	4.2%	5.8pp	✓ OK
Construction	8%	3.9%	4.1pp	✓ OK

4.2 Single Borrower Limits

Maximum single borrower exposure is capped at 10% of Tier 1 Capital (approx. €48m at current capitalisation). Group-level exposures are aggregated and treated as a single borrower for concentration purposes.

5.0 Collateral Standards

Version 3.2 · Effective 01 January 2026

5.1 Eligible Collateral

The Bank accepts the following collateral types, subject to the regulatory haircuts specified in CBUAE SA Article 208 (Real Estate) and Articles 197–198 (Financial Collateral):

Collateral Type	Eligibility	Max Regulatory Haircut	Revaluation Frequency
Commercial Real Estate (IPRE)	CBUAE SA Eligible	25%	Annual (independent)
Residential Real Estate	CBUAE SA Eligible	20%	3 years (statistical)
Listed Equities	CBUAE SA Eligible	15%	Daily (market)
Government Bonds (IG)	CBUAE SA Eligible	4%	Daily (market)
Corporate Bonds (IG)	CBUAE SA Eligible	8%	Daily (market)
Business Assets / Receivables	Internal only	35–50%	Annual

6.0 Approval Authorities

Version 3.2 · Effective 01 January 2026

6.1 Delegated Authority Matrix

Authority Level	Max New Money	Rating Floor	Requires Co-Signatory
Relationship Manager	€1m	BBB–	No
Regional Credit Officer	€10m	BB	Yes (RM)
Senior Credit Officer	€25m	BB–	Yes (RCO)
Chief Risk Officer	€75m	B+	Yes (SCO)
Credit Committee	Unlimited	Any (min. B–)	Quorum required

7.0 Covenant Framework

Version 3.2 · Effective 01 January 2026

7.1 Financial Covenants — CRE Loans

Covenant	Standard Level	Cure Period	Consequence of Breach
Debt Service Coverage Ratio	> 1.25x (tested quarterly)	90 days	Cash trap + review
Loan-to-Value Ratio	< 70% (tested annually)	60 days	Mandatory repayment
Interest Coverage Ratio	> 2.0x	90 days	Cash trap
Occupancy Rate	> 80% (tested annually)	120 days	Enhanced reporting

8.0 Exceptions & Escalation

Version 3.2 · Effective 01 January 2026

8.1 Policy Exception Process

Any credit proposal that does not comply with one or more standards in this policy requires a formal Policy Exception. Exceptions must be documented in the Credit Memorandum, approved by a minimum of two approval levels above the standard delegated authority, and reported to the Risk Committee on a quarterly basis.

8.2 Exception Register Summary (Q4 2025)

Exception Type	Count (Q4 2025)	Approved By
LTV above policy maximum	7	Credit Committee
DSCR below minimum	12	CRO / Credit Committee
Rating below floor	4	Credit Committee
Tenor above maximum	3	Credit Committee

Risk Category	Appetite	Tolerance	Current Status
Credit Risk	Moderate	NPL < 3%, EL < 1.0%	✓ Within
Concentration Risk	Low	No sector > 40%	⚠ Monitor
Liquidity Risk	Low	LCR > 110%	✓ Within
Market Risk	Low	VaR < €4.2m	✓ Within
Operational Risk	Low	Zero tolerance for material failures	✓ Within
Reputational Risk	Very Low	Zero tolerance	✓ Within

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CBUAE Standardised Approach — Capital Adequacy Standards for Credit Risk

Central Bank of the UAE · Standards Re Credit Risk (Standardised Approach) · Effective 2021 · Based on Basel III SA · 952% cap applies

Risk Weight Framework

CBUAE Standards Re Credit Risk — Standardised Approach

Exposure Class	Risk Weight	Key Condition
UAE Sovereign (Federal & Emirate Government)	0%	AED or foreign currency
PSE — Non-Commercial	50%	Government entity, non-commercial criterion per CBUAE GRE List
GRE — Government Related Entity	20–150%	Rated like corporate per ECAI; CBUAE GRE List
MDB — Eligible	0%	World Bank, IFC, IsDB, ADB, BCBS-listed MDBs
MDB — Other	50%	Non-listed multilateral development banks
Banks — short-term (<3 months)	20%	Interbank / trade finance
Banks — AAA / AA / A (long-term)	20% / 20% / 50%	CBUAE Standards p.32 — Bank rating table
Banks — BBB (long-term)	50%	CBUAE Standards p.32 — Bank rating table
Banks — BB / B (long-term)	100%	CBUAE Standards p.32
Banks — Unrated	50%	CBUAE Standards p.32 — default for unrated banks
Securities Firm	50–150%	Treated as corporate per prudential standard
Corporates (AAA – AA)	20%	External ECAI rating required — CBUAE Standards p.33
Corporates (A)	50%	CBUAE Standards p.33
Corporates (BBB)	100%	CBUAE Standards p.33
Corporates (BB and below BB)	100%	CBUAE Standards p.33
Corporates (B and below B)	150%	CBUAE Standards p.33
Corporates (CCC and below)	150%	CBUAE Standards p.33
Corporates — Unrated	100%	Due diligence required
SME — Qualifying Retail	75%	Value ≤ AED 4m per facility (Standards Section III G(iv)); revenue < AED 250m; diversified portfolio
SME — Corporate (non-qualifying)	85%	Revenue < AED 250m; facility size > value threshold or concentrated
Retail (qualifying)	75%	Granularity & exposure limits
Residential Real Estate (LTV ≤ 85%)	35% / 100% blended	Owner-occupied, repayment mortgage; CBUAE Para 27: 35% on first AED 10m, 100% above
Residential Real Estate (LTV > 85%)	75%	Higher LTV cliff at 85%; no tiering above 10m threshold
Residential property — 4-property limit	100%	CBUAE Para 30: retail borrower holding >4 properties must use 100% RW for all
Commercial Real Estate (CRE)	100%	All CRE — no LTV preference
Past Due — RRE mortgage (>90 DPD)	100%	CBUAE Standards Para 32: flat 100% regardless of provision level
Past Due — other, provisioned ≥ 20%	100%	Specific provision meets threshold
Past Due — other, provisioned < 20%	150%	Insufficient provisioning
Maximum Risk Weight (cap)	952%	Replaces 1,250% used elsewhere

Eligible Collateral & Haircuts

CBUAE Standards — Financial Collateral Simple Method

Collateral Type	Eligible	Haircut	Effect
Cash (AED / same currency)	✓ Yes	0%	Full RW offset
UAE Govt / CBUAE securities	✓ Yes	0 – 4%	Substitution
Rated bonds (IG, ≥ BBB–)	✓ Yes	4 – 8%	Substitution
Listed equities (main index)	✓ Yes	15 – 25%	Substitution
Residential Real Estate	✓ Yes	LTV-based	35% RW if LTV ≤ 85%
Commercial Real Estate	Partial	N/A	100% RW floor applies
Guarantees (ECAI-rated guarantor)	✓ Yes	0%	Substitution to guarantor RW

⚡ 9 CBUAE Optimisation Levers — SmartAgent Targets

1 · External rating assignment (unrated → rated, 100% → 20–75%)

2 · RRE LTV reduction below 85% cliff (75% → 35%)

3 · SME qualifying retail reclassification (100% → 75%)

4 · SME corporate recognition (100% → 85%)

5 · CRE → RRE reclassification where eligible (100% → 35–75%)

6 · Financial collateral recognition (cash / govt bonds)

7 · Guarantor substitution (high RW → guarantor RW)

8 · Past-due provisioning uplift ≥ 20% (150% → 100%)

9 · CRE collateral registration & valuation (unlock partial CRM)

Source: Central Bank of the UAE — Standards Re Credit Risk (Standardised Approach), issued pursuant to the UAE Banking Law (Federal Decree-Law No. 14 of 2018). All risk weights applied in this platform are based on the CBUAE framework. Data is synthetic and for demonstration purposes only.

Policy & Strategy Engine

1.0 General Credit Principles

1.1 Purpose and Scope

1.2 Credit Culture

1.3 Minimum Credit Standards

2.0 Lending Criteria

2.1 Borrower Assessment

2.2 Financial Analysis Requirements

2.3 Rating Requirements

3.0 CRE Financing Guidelines

3.1 Eligible Property Types

3.2 CRE-Specific Underwriting Standards

4.0 Concentration Limits

4.1 Sector Concentration Limits

4.2 Single Borrower Limits

5.0 Collateral Standards

5.1 Eligible Collateral

6.0 Approval Authorities

6.1 Delegated Authority Matrix

7.0 Covenant Framework

7.1 Financial Covenants — CRE Loans

8.0 Exceptions & Escalation

8.1 Policy Exception Process

8.2 Exception Register Summary (Q4 2025)

Strategic Plan 2024–2027 — Key Performance Targets