DOHA: Global rating agency, Fitch Ratings, in its latest peer review report has affirmed seven Qatari banks, both conventional and Islamic, with stable credit outlooks as a result of their strong capital base, asset quality and low NPAs ratios. They are Qatar National Bank, Commercial Bank of Qatar Doha Bank, Al Khaliji, Qatar Islamic Bank, International Islamic Bank and Ahli Bank, said a press statement yesterday.
The seven banks included in this peer review are Qatar National Bank (QNB; ‘A+’/’F1’/’a’), Commercial Bank of Qatar (CBQ; ‘A’/’F1’/’bbb’), Qatar Islamic Bank (QIB; ‘A’/’F1’/’bbb’), Doha Bank (DB; ‘A’/’F1’/’bbb’), Ahli Bank Q.S.C. (ABQ; ‘A-‘/’F2’/’bbb-‘), Al Khalij Commercial Bank (al khaliji) Q.S.C. (Al Khaliji; ‘A-‘/’F2’/’bb+’), and Qatar International Islamic Bank (QIIB; ‘A-‘/’F2’/’bb+’). The Outlooks for all seven banks are Stable. A complete list of rating actions for the banks and their related entities is included at the end of this rating action commentary.
Fitch’s view of support is based on a strong history of sovereign support including measures to boost capital, as well as asset purchases, as clearly demonstrated in recent years. Support is the primary factor driving the Issuer Default Ratings (IDRs).
Qatari banks’ IDRs, Support Ratings and Support Rating Floors reflect the extremely high probability of support available from the Qatari authorities if needed. Fitch’s opinion of support is based on the ability and willingness of Qatar to support the banking sector. The government owns stakes in all the banks following capital injections into the banking system between 2009 and 2011. Additional supportive actions taken by the Qatari authorities included direct asset purchases (both loans and equities) in 2009.
The sovereign’s capacity to support the banking system is sustained by its sovereign wealth funds and on-going revenues mostly from its hydrocarbon production. The Support Ratings and SRFs assigned to each bank reflect differences in the systemic importance, franchise, market share and government ownership of each bank.
The ratings would be sensitive to a reduced perceived ability from the authorities to provide support. The ratings could also be sensitive to a change in the authorities’ perceived willingness to support the banking sector. Given Qatar’s robust economy and the authorities’ strong track record of support for local banks, downside pressure is considered low.
These banks’ Viability Ratings (VRs) reflect their strong capital base and healthy performance, the strong economic environment supported by public sector initiatives, and stable core funding and liquidity. These strengths are counterbalanced by continued risk with respect to concentrations on both sides of the balance sheet, deteriorating restructured and past due loans at some banks, rapid credit growth and a dependency on government-related spending and Qatar’s undiversified economy.
The Peninsula
