Capital Intelligence (CI), an international rating agency, has affirmed the long-term foreign currency rating (LT FCR) and short-term foreign currency rating (ST FCR) of QNB at ‘AA-’ and ‘A1+’, respectively.
At the same time, CI has affirmed QNB’s bank standalone rating (BSR) of ‘a’, core financial strength (CFS) rating of ‘a-’ and extraordinary support level (ESL) of "very high". The outlook for all ratings remains "stable".
The bank’s LT FCR is set three notches above the BSR to reflect the very high likelihood of "extraordinary" support from the government in case of need.
This is based on the government’s strong track record of support for Qatari banks, CI said, highlighting that at different points in time such support has included the transfer of ‘difficult investments’ to the State, the transfer of real estate loans and the injection of additional equity.
The government’s financial capacity to support the bank is also considered as strong given Qatar’s sovereign rating (‘AA-’/stable).
As QNB is by far the largest bank in the system with more than half of sector assets, with the government as the major shareholder and the status as a ‘national bank’, the probability of government support in the event of need is extremely high, CI said.
QNB’s BSR is based on a CFS rating of ‘a-’ and an operating environment risk anchor (Opera) of ‘bbb’. The CFS is supported by the bank’s financial credit strengths of good asset quality, very strong capitalisation, and good profitability at both the operating and net levels.
QNB’s overall good asset quality is reflected in low non-performing loans (NPLs), high and rising loan loss reserve coverage, and high extended NPL coverage ratios.
QNB is well capitalised with strong capital adequacy and T1 (Tier-1) ratios, and capital is good despite a significant AT-1 (additional Tier-I) component and its profitability remains strong, consistent, and relying on stable sources of income, supported by very good cost efficiency.
The ratings are also supported by a series of non-financial factors with domestic franchise being key strength. QNB’s size means a dominant share of both loans and customer deposits.
The lender has much more international reach than other Qatari banks.
"Being a very large bank in what is a relatively small market also limits QNB’s opportunities for domestic growth in both loans and deposits; going international has therefore been a necessity and it is likely that future growth will largely come from abroad," CI said.
Although the two most important presences are via the Egyptian and Turkish subsidiaries, QNB also has a wide network of foreign branches and associates, adding diversification to both the loan portfolio and the funding base, it noted.
The bank’s LT FCR is set three notches above the BSR to reflect the very high likelihood of "extraordinary" support from the government in case of need.
This is based on the government’s strong track record of support for Qatari banks, CI said, highlighting that at different points in time such support has included the transfer of ‘difficult investments’ to the State, the transfer of real estate loans and the injection of additional equity.
The government’s financial capacity to support the bank is also considered as strong given Qatar’s sovereign rating (‘AA-’/stable).
As QNB is by far the largest bank in the system with more than half of sector assets, with the government as the major shareholder and the status as a ‘national bank’, the probability of government support in the event of need is extremely high, CI said.
QNB’s BSR is based on a CFS rating of ‘a-’ and an operating environment risk anchor (Opera) of ‘bbb’. The CFS is supported by the bank’s financial credit strengths of good asset quality, very strong capitalisation, and good profitability at both the operating and net levels.
QNB’s overall good asset quality is reflected in low non-performing loans (NPLs), high and rising loan loss reserve coverage, and high extended NPL coverage ratios.
QNB is well capitalised with strong capital adequacy and T1 (Tier-1) ratios, and capital is good despite a significant AT-1 (additional Tier-I) component and its profitability remains strong, consistent, and relying on stable sources of income, supported by very good cost efficiency.
The ratings are also supported by a series of non-financial factors with domestic franchise being key strength. QNB’s size means a dominant share of both loans and customer deposits.
The lender has much more international reach than other Qatari banks.
"Being a very large bank in what is a relatively small market also limits QNB’s opportunities for domestic growth in both loans and deposits; going international has therefore been a necessity and it is likely that future growth will largely come from abroad," CI said.
Although the two most important presences are via the Egyptian and Turkish subsidiaries, QNB also has a wide network of foreign branches and associates, adding diversification to both the loan portfolio and the funding base, it noted.
