Capital Intelligence (CI) affirms Qatar Islamic Bank ratings

The ratings are based on the Bank's intrinsic financial strength and, as is the case with other Qatari banks, a very high level of support from the highly rated State of Qatar (CI Long-Term and Short-Term Sovereign Ratings of 'AA-' and 'A1+'). The Support Rating of '2' is also affirmed, as is the Financial Strength Rating (FSR) of 'A'. All Ratings carry a 'Stable' Outlook.

The Bank's ratings are supported by its good asset quality as well as improved liquidity. As the leading Islamic bank in Qatar, QIB enjoys a substantial franchise, which has enabled it to increase its customer deposit base. It is expected that new Qatar Central Bank regulations excluding the commercial banks from conducting Islamic Banking will enhance the Bank's growth potential in the Qatari market.

Capital contributed by the Qatar Investment Authority (QIA) has enabled the Bank to sustain high growth in total assets and strong capital adequacy. However, as is the case with other Qatari banks, internal capital generation has been low due to high dividend payments.

A major ratings constraint is that QIB's operating profitability has been on a declining trend. There is a need to strengthen core activities and to redefine the scope of the Bank's investments and international operations. Balance sheet maturity mismatching is also a constraining factor, although this is being addressed as the Bank has begun to raise medium-term funding with sukuk.

Qatar Islamic Bank (QIB) was the first Islamic banking institution to be incorporated in Qatar in 1982. Following a special issue of shares in 2009 and 2011, the Bank's single largest shareholder at end 2010 was the Qatar Investment Authority (QIA) with 16.67%. QIB is the third largest bank in the local market and the leader in Qatar's growing Islamic banking industry.

QIB's domestic operating platform is a network of 28 full service branches. The Bank provides a full range of Islamic investment and financing services through various Shari'a compliant products for both corporate and retail clients. QIB is also considered to be a major player regarding the issuance of sukuk in Qatar and internationally through its affiliates in London and Malaysia. QIB is also present with an equity stake in Arab Finance House, which offers retail and corporate banking services in Lebanon.