Posted on April 14, 2014

Qatar Islamic Bank (QIB), Qatar’s leading Islamic bank, has been reaffirmed by international credit ratings agency, Capital Intelligence (CI), with a Financial Strength Rating (FSR) of ‘A’ in its latest report issued in April 2014, which also stated that the Outlook on the FSR had been changed to ‘Stable’ in view of the significant improvement in financing asset quality and stabilised Return on Average Assets (ROAA).
Cyprus-based Capital Intelligence has been providing credit analysis and ratings for the past three decades, and now rates over 400 banks, corporates and financial instruments (bonds and sukuk), including Islamic institutions, in 37 countries. The Bank’s Long and Short-Term Foreign Currency Ratings (FCR) were also re-affirmed by CI at ‘A’ and ‘A2’, respectively, with a ‘Stable’ outlook in view of the Bank’s intrinsic financial profile, Qatar’s economic growth potential, and ongoing government support for all Qatari banks. Based on the strength of the Qatari government balance sheet, the Support Rating was re-affirmed at ‘2’.

CI said QIB’s FSR was supported by the Bank’s low leverage and good capital adequacy ratios, as well as by improved liquidity – which have benefited from more efficient use of capital and sustained growth in customer deposits. Growth in credit risk weighted assets was contained through measured growth in financings, while market risks were reduced through more centralised risk management and sale of investment properties – allowing the Bank to improve its capital adequacy ratio (CAR), which stands at a good level in both absolute and relative terms.

CI also reported that growth in the total asset base slowed last year as the Bank focused on improving its asset quality; and greater control of associate banks and real estate subsidiaries should enable QIB to better manage its international activities and to reduce the legacy investment portfolio through sales and provisioning.

QIB’s improved and stronger financial position was based on 2013 financial results where the Bank managed to implement successful risk management strengthening all prudential ratios. QIB was able to bring down the ratio of non-performing financing assets to gross financing assets to 0.9% compared to 1.6% for the previous year 2012, reflecting the quality of the Bank’s financing assets portfolio and its effective risk management framework. Total Shareholders’ Equity of the Bank increased by QAR 386 million to reach QAR 11,860 million, helping the Bank to improve its capital adequacy ratio to 16.5%.

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QIB’s Group CEO, Bassel Gamal, welcomed CI’s confirmation of the Bank’s financial strength. “We have been making steady progress in accomplishing our long term strategic objectives,” he said. “In positioning ourselves as a Trusted Full Service Islamic Financial Services Provider, QIB is focusing on increasing local market share and deepening client relationships in the Public Sector, while in the Private Sector we are also specialising in specific industry sectors, and better understanding our clients’ needs, in addition to giving a natural fit of Islamic finance with SMEs in order to support the 2030 Vision.“

“On the international front, QIB has been gaining control over existing international operations which it is now in the process of solidifying and expanding opportunistically, but cautiously, to become a truly regional and international player,” Mr. Gamal added. “QIB will also increase market share to become the leading Personal Bank in Qatar by investing in Branches and Direct Channels to serve all our client segments, while giving differentiated offerings to Affluent and Private Banking customers, combined with a growth in our asset management business.

This is resulting in a clear and focused business strategy, combined with disciplined execution in improving all our services while investing in our people in order to give satisfaction and commitment to all our stakeholders” Mr. Gamal concluded.