Moody’s affirms QIB’s A1 rating with stable outlook
MOODY’S Investors Service (Moody’s) has reconfirmed the long-term deposit rating of Qatar Islamic Bank (QIB) at A1 with a stable outlook.
Moody’s said in its Credit Opinion Report that QIB remains Qatar’s secondlargest bank and the largest Islamic bank in the country, with a market share of around 10.5 percent of Qatar’s banking system assets, and a consolidated asset base of QR170 billion.
The report added that
QIB’s assigned rating reflects the bank’s strong asset quality, good profitability, adequate capital buffers and limited market-funding reliance, adding that QIB’s stable outlook also takes into account the stable outlook on the Qatari government’s bond rating of Aa3.
On QIB’s profitability, Moody’s said, “QIB has reported strong profitability which has been broadly stable in the 1.4-1.7 percent return on tangible assets. This performance is supported by the strong growth of the bank, which itself reflects the increasing penetration of Sharia-compliant assets in Qatar. This is also in line with the bank’s transformation strategy, which was adopted in 2012, reorienting its assets towards financing from and towards local operations from international operations. The bank’s profitability is also supported by its lower cost to income ratio, solid and stable year on year net profit margin and reduced funding costs.”
The credit report also mentioned that QIB has experienced rapid financing growth with the bank’s com
pound annual growth rate of 15 percent over 2012-19 for gross loans compared with the Qatar market average of 10 percent and more recently around 11.7 percent during 2019.
The bank’s ratio of NPFs to gross financing ratio is at 1.3 percent comparing favourably to the average of the Qatari banking sector. The bank’s asset quality is also supported by increased exposures to the Qatari government and quasi-government entities which are of high credit quality and have historically demonstrated zero default rates.
Moody’s said, “We expect QIB’s capitalisation to remain broadly stable above the bank’s minimum capital targets. The bank will meet future capital requirements arising from its asset growth through a combination of retained earnings and capital issuances.”
Commenting on the latest rating, QIB Group Chief Executive Officer Bassel Gamal said, “We are pleased with the affirmation of our rating by Moody’s. Despite the current global challenges, it has re-confirmed the strong financial position of Qatar, the banking sector outlook and QIB’s financial vigour, which has been steadily improving in line with our long-term objectives. It is a confirmation of QIB’s stability, sustainable business model, high asset quality and robust capital position.”
“We will remain committed to the highest work standards, and we will continue implementing our long-term business strategy with a continued focus to contribute to the growth of the local economy, while always being ready to navigate any potential challenges,” Bassel said.