Fitch affirms Ahli Bank QSC at 'A-'; outlook stable

The agency has simultaneously affirmed ABQ's Short-term IDR at 'F2', Individual Rating at 'C' and Support Rating at '1'. The Support Rating Floor is affirmed at 'A-'.

Ahli Bank QSC's IDRs and Support Rating reflect the extremely high probability of support from the Qatari authorities, if needed. The Individual Rating reflects the bank's adequate profitability and capitalisation. It also reflects the bank's small, albeit improving franchise, concentrations in loans and deposits, and reliance on a small and undiversified economy.

ABQ's net income declined 8.5% yoy in H109, driven by lower investment gains and higher loan impairment charges. Asset quality weakened slightly in H109, with the ratio of impaired loans/gross loans increasing to 1.8% (2008: 1.4%). Fitch expects some further deterioration, reflecting past rapid loan growth and the slowdown in economic activity in 2009. The Fitch calculated loans/deposits ratio was 99% at end-June 2009. Nevertheless, liquidity is adequate, as cash, government securities and interbank placements constituted around 31% of end-June 2009 assets. Capitalisation is adequate with tier 1 and total capital ratios of 11% and 13.8% respectively at end-June 2009.

The bank was established in 1983 as Al-Ahli Bank of Qatar before Ahli United Bank (AUB, rated 'A-'/ Outlook Stable) acquired a significant stake in the bank in 2004 and changed its name to ABQ. AUB held a 38.1% stake in ABQ at end-June 2009.

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.