QNB has considerably improved its ESG (environment, social and governance) ratings in a short span to occupy the top slot among the global peers, a top official of MSCI said yesterday.
“QNB is rated A, which means it is very strong on the leadership side,” Raman Aylur Subramanian, global head (equity applied research) of MSCI, told a seminar, jointly organised by MSCI and the Qatar Stock Exchange (QSE).
According to the MSCI ESG rating methodology, analysis begins with a deep governance assessment, followed by the focus on most relevant ESG factors by industry, focus on risk exposure (not just disclosure) and finally identifying leaders and laggards with leaders being classified under ‘AA’ and ‘AAA’, average performers under ‘BB’, ‘BBB’ and ‘A’; and laggards at ‘CCC’ and ‘B’.
MSCI started covering QNB in October 2015 with ‘BB’ rating and in 2016 and 2017, it became ‘BBB’ and in August 2019, it was upgraded to ‘A’ rating due to ‘strong position for meeting digital banking challenges’.
“So it is a fantastic improvement in the ratings and QNB should be product of it,” he said, adding financial system stability is one of the top notches as the bank has spent robustly on cyber security and digitisation of the entire process and that itself gives high rating comfort on the governance side.
In the financial system stability, it has a score of 6.4 out of 10. The majority of assets of QNB are based in Qatar, a country with a relatively lower risk of corruption and political instability, Subramanian said, adding that the lender also has strong anti-money laundering, know-your-customer policies and programmes as well as a group risk committee that consists of more than 50% independent directors
Pointing out that QNB’s overall industry relative score is 5.8 out of 10; he said “it is still very high compared to the peers”. Among the largest peers (banks), QNB stood atop, relegating other global brands as HSBC Holdings, Agricultural Bank of China, China Construction Bank Corporation, JP Morgan Chase, Citigroup, Bank of America, Bank of China, Industrial and Commercial Bank of China and Wells Fargo.
However, Subramanian highlighted some concerns such as the lack of diversity in the board (absence of females) and those relating to voting rights as well as sovereign intervention.
“If the bank can look at the concern areas and address them, it can achieve higher ratings,” MSCI official said.
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