Standard & Poor’s (S&P), an international credit rating agency, has upgraded its outlook on Commercial Bank to ‘stable” from “negative” and affirmed a short-term rating of ‘A-2’ and a long-term rating of ‘BBB+’.
In its report, the ratings agency cited Commercial Bank’s position as the third-largest bank in Qatar, its healthy capitalisation, and its ongoing work to reshape its loan book toward lower risk sectors as factors in the decision to upwardly revise the bank’s outlook.
“Our ratings on Commercial Bank reflect its good franchise in Qatar as the third-largest bank in the system. The bank holds 14% of its assets in liquid form and has another 10% in highly rated government bonds. As a systemically important bank in a highly supportive country, the long-term rating on Commercial Bank is three notches higher than the bank’s SACP (stand-alone credit profile),” S&P said.
The decision to improve Commercial Bank’s rating comes days after S&P revised its outlook on Qatar from “negative” to “stable”, giving the country a rating of ‘AA-/A-1+’ because of the country’s “effective management of the fallout from the ongoing boycott related to trade and financial flows”.
“This upward revision is due to the prudent economic management by the government and Qatar Central Bank since the blockade resulting in a revision of the country rating outlook to stable, and for Commercial Bank the positive view is based on the strong execution of our five-year strategic plan,” according to Joseph Abraham, group chief executive, Commercial Bank.
He said the bank has been achieving its goals set out two years ago due to its careful management of capital, provisions for legacy loan book, reduction of cost-to-income ratio, de-risking and re-shaping balance sheet, and continuity in building its franchise based on innovation and new technology.
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