Capital Intelligence (CI), the international credit ratings agency, has affirmed Doha Bank ‘s Long- and Short-Term Foreign Currency Ratings (FCR) at ‘A’ and ‘A2’, respectively, reflecting the Bank’s intrinsic financial condition, the continued strong economic growth in Qatar.
Based on the strength of the Qatari government’s balance sheet and Qatar Investment Authority’s (QIA’s) significant shareholding in the bank, the Support Rating is affirmed at ‘2’. A ‘Positive’ Outlook is appended to the Long-Term FCR to reflect the expected improvement in DB ‘s overall credit profile upon completion of the rights issue currently in process and the anticipated GDR placements.
The Financial Strength Rating (FSR) is affirmed at ‘A’, on ‘Stable’ Outlook, based on the anticipated improvement in the capital position, improved asset quality and loss reserve coverage, and the Bank’s domestic and international franchise.
The FSR remains constrained by: tight liquidity, particularly in terms of a still high net loans to customer deposits ratio, with some dependence on interbank borrowings; by market pressure on net interest margins; and by low internal capital generation due to high dividend payouts. Robust economic conditions provide significant support to the ratings, despite the small size of the Qatari banking market in terms of population.
Doha Bank is raising additional capital through a rights issue, likely to be followed by a further 25 percent increase through a GDR placement, which is expected to allow the bank to grow its loan assets and gross income at a higher rate.