Qatar International Islamic Bank ratings affirmed

All ratings carry a 'Stable' outlook. At the same time CI affirms the support rating of 2.

ratings capture the recently demonstrated government financial support of the Qatari banking system (including support of QIIB itself), which has enabled the Bank to maintain its solid capital adequacy and overall sound financial condition. The ratings are constrained by the volatility in the Bank's income from securities and real estate as well as its tightening liquidity and relatively small market share. CI also notes that QIIB's ratings may come under pressure if the weakness in the Bank's investment and trading income persists in 2010.

QIIB's capital adequacy remains strong following equity subscribed in 2009 by the Qatar Investment Authority (QIA, the country's sovereign wealth fund) as part of the government's support for Qatari banks following the onset of the international financial crisis. Despite tightening credit standards, in 2009 QIIB registered relatively good growth in its financing portfolio. The Bank also rebalanced its portfolio as it took on more government sector risk and reduced its real estate exposure, including the sale of real estate assets to the government under the official support programme for banks. Asset quality remained sound and loss coverage was adequate considering loss reserves, general risk reserve and collateral security.

Income from financing activity, underpinned by the Bank's strong profit sharing differential, grew at a good pace. However, the Bank recorded sharply lower income from securities and property trading and consequently growth in net profit in 2009 was low for the second year running. In part due to good cost control the Bank's profitability, though much reduced, remained strong in relation to peers. Liquidity continued to be relatively tight in relation to financing activities, but the Bank has increased its liquid assets by expanding its funding base including deposits from other banks.

QIIB was incorporated in 1990 as the second Islamic commercial bank in the country. Following a special issue of shares in 2009 the Bank's single largest shareholder is now the Qatar Investment Authority with an interest of 9.09%. QIIB engages in both Islamic financing and investing activities and operates through a domestic network of 13 branches. QIIB also participates in a small number of associate companies in the banking, insurance and real estate sectors mainly in Qatar as well as in Syria.