Fitch assigns Qatar's Doha Bank 'A' rating - Outlook Stable

Fitch also affirmed the bank's Individual rating at 'C' and Support rating at '1'.

The IDRs take into account the high probability of support from the Qatari authorities, if required, reflecting the bank's systemic importance and the Central Bank's willingness and ability to maintain confidence in the local market.

The Individual rating reflects DB's solid franchise, international expansion strategy and improving asset quality and profitability indicators. It is constrained by rapid loan growth, asset concentration within Qatar and the bank's relative size compared to regional peers.

DB is highly profitable, which is partly attributable to its leading position in the relatively high margin retail segment. Loan impairment provisions remain low and efficiency levels are satisfactory, although inflationary pressure on wages and overhead is becoming more of an issue in this market.

Like its peers, DB has seen rapid loan growth in recent years under buoyant economic conditions in Qatar. This is, however, asserting negative pressure on liquidity and capital indicators, which are both at acceptable levels.

Fitch views positively the boost to capitalisation from the bank's QAR1.1bn rights issue concluded this week, which will be utilised in part to fund its expansion strategy. Asset quality continues to improve and is an important rating driver.

Fitch has, however, moderate concern that fast loan growth could lead to future problem assets, especially if there were a downturn in the real estate segment, although these are sector wide issues and the risk of this occurring in the near term is moderate.

The agency views positively DB's increased focus on retail banking and private sector business; both are highly profitable and also increasingly competitive. DB is, therefore, expanding internationally, through establishing representative offices in Qatar's main trading markets.

These operations are low risk, as the focus is primarily on trade-related business. The strategy is, however, unproven and needs to be managed closely, especially if these offices are eventually converted into full branches.

DB was created in 1979 and is Qatar's third-largest bank. It offers a full product range, including Islamic banking. The bank is listed on the Doha Securities Market (DSM) and its shareholders include members of the ruling family and other prominent Qatari investors.

The shareholders appear committed and highly supportive. However, no individual shareholder can own more than 2% of shares (the cap on non-Qatari shareholdings is 25%). DB operates a network of 36 branches (including four Islamic branches), 10 electronic branches, 2 mobile branches and 108 ATMs, supported by a 24-hour call centre and telephone and internet banking.

DB has wide international coverage with a branch in the USA and United Arab Emirates (Dubai) and representative offices in China, Turkey, Singapore, Japan and Romania.