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Qatar National Bank - Fitch ratings reflect dominant domestic franchise

Global Arab Network - - Gamal Ragay

Tuesday, 13 July 2010 20:51

Qatar National Bank - Fitch ratings reflect dominant domestic franchise

Fitch Ratings has today affirmed Qatar National Bank's (QNB) ratings at Long-term Issuer Default (IDR) 'A+', Short-term IDR 'F1', Individual 'B/C' and Support '1'. The Support Rating Floor is affirmed at 'A+'. The Outlook for the Long-term IDR is Stable.

QNB's IDRs reflect the extremely high probability of support from the Qatari authorities, if ever required. Fitch's view of support is based on QNB's 50% state ownership, systemic importance as Qatar's largest lender/deposit taker and the authorities' recent support measures for the banking system.

The Individual Rating reflects QNB's dominant domestic franchise, close links to the Qatari government/public sector, and its sound financial profile, underpinned by good capitalisation and liquidity and strong income generation capability. It also reflects large concentrations in loans and deposits.

While QNB's recent reported performance has been good, it has benefited from the Qatar government's support package that saw the removal of domestic equities and certain real estate and other loans from the bank's balance sheet in exchange for cash and Qatari government debt. Results for H110 show rapid growth in net income (QAR2.7bn, up 31% yoy) and total lending (QAR118bn, up 42% yoy) as the domestic economy continues to prosper. The liquidity position remains healthy (H110 loans/deposits ratio of 84%), while capital is sound with a Fitch eligible ratio of 19% at end-2009.

Founded in 1964, QNB is Qatar's largest bank, controlling around 40% of system assets. The bank is primary banker to the state and a full-service commercial bank. QNB has a fast-growing domestic Islamic franchise and extensive international operations with stakes in QNB - Switzerland (100%), Ansbacher Banking Group, UK (100%), Housing Bank for Trade and Finance, Jordan (34%), Tunisian-Qatari Bank, Tunisia (50%), Mansour Bank, Iraq (23%), Commercial Bank International, UAE (24%) and QNB Syria (49%). QNB also has branches in London, Paris, Singapore, Yemen, Oman, Sudan and Kuwait and representative offices in Iran and Libya.

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.

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