CI-Qatar banks tighter liquidity ratios
March 16 2021 07:38 PM
Capital Intelligence (CI)
Capital Intelligence (CI)

The "well-capitalised" Qatari banking system as a whole exhibits somewhat tighter liquidity ratios than in other markets, according to the Capital Intelligence (CI), a global credit rating agency.

"The funding position of Qatari banks (and in particular the larger players) is impacted by the limited domestic retail funding base and limited availability of non-government corporate deposits, CI said.

As long as the Qatari banks retain good access to international capital markets for medium-term financing, funding "will be manageable", especially as the government sector has shown itself to be both willing and able to add liquidity whenever needed, it said.

Highlighting that the Qatar government has a strong track record of supporting the local banks; it said at different points in time such support has included the transfer of ‘difficult investments’ and real estate loans to the state, and the injection of additional equity.

Recently, all banks could to rely on a sharp increase in government deposits to stave off any liquidity pressures following the Gulf crisis, it said, adding, moreover, the government has ownership stakes in all Qatari banks.

CI made these observations while revising the outlook on Commercial Bank’s long-term foreign currency rating (LT FCR) and bank standalone rating (BSR) to "stable" as well as affirming LT FCR and short-term FCR (ST FCR) of Ahlibank at ‘A’ and ‘A1’ respectively.

CI has also affirmed the Commercial Bank’s LT FCR and ST FCR at ‘A-’ and ‘A1’, respectively, as well as its BSR of ‘bbb-’.

In the case of Commercial Bank, the rating agency said the revision of the outlook to "stable" reflects the more favourable trend in the Bank’s financial metrics, partially as a result of its new business model as the lender continues to shift the composition of its loan book towards lower-risk sectors, with non-performing loans trending down and coverage improving. The credit loss absorption capacity is also enhanced.

The Commercial Bank’s LT FCR is set three notches above the BSR to reflect the high likelihood of official extraordinary support in case of need, it said, adding this is based on the government’s strong track record of support for Qatari banks.

In the case of Ahlibank Qatar, CI said the lender's LT FCR is set two notches above the BSR to reflect the high likelihood of official extraordinary support in case of need.

CI has affirmed Ahlibank Qatar's BSR of ‘bbb+’, core financial strength rating of ‘bbb+’ and extraordinary support level of high. The Outlook for the LT FCR and BSR remains "stable".


Last updated: March 16 2021 07:38 PM

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