Moody’s credit rating agency on Wednesday announced that it has assigned ‘A2’ ratings to QIIB with a stable outlook, noting that QIIB enjoys many advantages that outweigh the strength of its financial position and its entitlement to this high degree.
On the rationale behind its rating, Moody’s said, the rating reflects its position as one of Qatar’s leading Islamic financial institutions, particularly in the retail segment and solid asset quality, profitability, liquidity and capitalisation. The issuer ratings incorporate a very high likelihood of support from the Government of Qatar (Aa3 stable).
Moody’s indicated that QIIB enjoys high asset quality which is supported by the exposure to Qatar Government assets and quasi-government entities, which are of relatively high credit quality and have historically demonstrated zero default rates.
In its analysis of QIIB, Moody’s indicated that the bank enjoys a solid financing profile backed by the privilege of having a significant market share in the retail sector of around 9.2 percent of total retail lending in Qatar and this also supports the QIIB’s healthy margins and also provides a strong base of low-cost deposits.
The rating agency noted that QIIB’s capital adequacy ratio as per Basel III guidelines was high at 16.6 percent (as of September 2021), which is a level significantly higher than the regulatory limit of 10.5 percent, and expected that the QIIB capital position will remain solid at levels above both the local average and global medians.
Moody’s explained that one of the factors that support QIIB’s strong capital is its strong profitability, which is supported by the net profit margin, which remained stable at the level of 2.2 percent during the first nine months of 2021.
Moody’s noted that QIIB enjoys a strong advantage in terms of Islamic deposits, as the bank has historically maintained the lowest ratio of net financing to customer deposits among its Qatari counterparts since 2011.
In addition, QIIB maintains high liquidity so that the bank’s liquid assets-to-total assets ratio remained strong at 32 percent as of September 2021, which compares favourably with the Qatari banking sector average of 22 percent.
Commenting on Moody’s affirmation of QIIB’s credit rating at ‘A2’ with a stable outlook, QIIB Chief Executive Officer Abdulbasit Ahmed Al Shaibei said, “We are pleased with this high rating from Moody’s for two main reasons. First, it reflects QIIB’s ability to keep pace with the strength of the prosperous Qatari economy and growth in its various sectors, especially the banking sector, and second, this rating confirms that we are moving forward in the right path in implementing our interim and strategic plans.”
He said, “The Moody’s report and its many positive points that confirm the strength of QIIB indicate that the bank has been able to successfully face an emergency and challenging situations in the market, especially with regard to the repercussions of COVID-19 pandemic. QIIB adapted its work quickly in line with the needs of the market and requirements of its customers, which was positively reflected on the bank’s improving performance and various other indicators.”
He said, “In the field of digital transformation, a wide-ranging strategy that focused on transitioning classic banking operations into digital was implemented. The level of achievements in this respect in the past period was great and the results exceptional, perhaps the most important of which was tangibly enhancing operational efficiency, as well as expanding the bank’s customer base.
“While constantly monitoring customer satisfaction, which remains high, we are determined to further improve the level of services we offer our customers. We will continue to enhance our digital services, which technology can provide.”
The CEO said, “We are keen to strengthen our strategy- both locally and abroad with due diligence while maintaining the vitality of the banking business and its ability to be flexible by taking advantage of the great opportunities offered by the Qatari economy in its various sectors. We will do this by focusing on financing projects with high feasibility, and at the same time, contributing to the development of the economy and society at large.”
“QIIB will continue to implement carefully studied plans with the aim of improving the bank’s various financial indicators, maintaining the highest credit ratings, and actively engaging with the business sector in order to contribute to the growth of the Qatari economy.”