Qatar-based Doha Bank assigned 'A-/A-2' ratings; outlook stable

"The ratings reflect Doha Bank's very strong financial performance, improved asset quality enhanced by superior portfolio granularity compared with peers', and robust liquidity," said Standard & Poor's credit analyst Anouar Hassoune. "The ratings are constrained, however, by concentration risks in a narrow domestic market, very fast asset growth with risks of excessive leverage beginning to loom, and the credit risks attached to the corporate-banking portfolio dominated by exposures to private sector obligors."

As Doha Bank is systemically important to the State of Qatar (AA-/Stable/A-1+), the ratings on the bank include a one-notch uplift for extraordinary government support.

"The stable outlook mainly reflects our expectation that Doha Bank will continue to strengthen its market position, and retain its solid financial profile," said Mr. Hassoune.

"The future direction of the ratings will largely depend on the evolution of Qatar's macroeconomic environment, as well as on the bank's endeavors toward further diversification across business lines and geographies."

The ratings could be raised, in line with sustained economic growth, if the bank manages to maintain resilient financial performance despite lower hidden reserves in the form of realizable investment gains, and despite increasing competition putting pressure on margins and thus providing further incentives to play the volume game more aggressively. Therefore, the ratings could come under pressure if capital ratios, liquidity, or asset quality deteriorate below anticipated levels.

Please note that Standard & Poor's will be holding conferences on the European bank sector across Europe, examining how financial institutions are managing their way through the various risks and challenges posed by the recent turbulence in the financial markets, and how these events may affect the way they operate in the future. These conferences will be taking place in Paris on November 20, London on November 21, and Frankfurt on November 22.