Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Qatar Islamic Bank’s (QIB) long-term foreign currency rating of ‘A’, its short-term foreign currency rating of ‘A2’ and its financial strength rating of ‘A’. At the same time CI has raised QIB’s support rating to 2 from 3 on the basis of the strength of Qatar´s ‘AA-‘ (AA minus) sovereign rating and in view of the Qatari government’s demonstrated strong support for the country’s banking system. All ratings carry a ‘Stable’ outlook.
QIB is the leading Islamic bank in Qatar with a growing share of the market. Its financial strength is underpinned by good asset quality, strong capitalisation and very high profitability. QIB’s net profit sharing differential is the highest and its cost/income amongst the best in CI’s peer group of Qatari banks. Sources of non-profit sharing income are diversified and this has enabled QIB to achieve high rates of growth in net profits.
QIB’s customer deposit funding has enabled it to strengthen liquidity in 2009 from year end levels which had tightened because of strong growth in financing activity. The Bank has also benefited from the government’s plan to purchase part of Qatari banks’ real estate portfolios in May of this year. However, though improving in 2009, liquidity is likely to constrain high rates of balance sheet growth. Returns from the Bank’s real estate investment portfolio may also be expected to be weaker in the current operating environment. CI therefore considers that should these constraints persist they may tend to weaken the Bank’s income growth potential and eventually exert some pressure on the financial strength rating. However, CI expects that given its business expertise and strong financials the outlook for QIB is to continue to perform very well albeit at lower rates of growth.
QIB was established in 1982 as the first Islamic banking institution incorporated in the state of Qatar. The bank’s financing portfolio is well balanced among customer types and sectors. Over the years QIB has substantially broadened its operations – both in terms of the scope of its activities and the geographical spread of its network – through strategic alliances. Drawing on its substantial strength in Islamic Finance QIB has built a meaningful international presence through its associate companies.
This has enabled the bank to participate in highly visible transactions which further diversify business cb,h risks and sources of income.
