(MENAFN Press) Capital Intelligence (CI), the international credit rating agency, announced today that it has affirmed Doha Bank's (DB's) Long and Short-Term Foreign Currency Ratings at 'A' and 'A2', respectively, on 'Stable' Outlook, based on the Bank's sound financial condition, robust economic conditions in Qatar and ongoing government support for all Qatari banks. Based on the strength of the Qatari government balance sheet, the Support Rating is affirmed at '2'.
DB's Financial Strength Rating (FSR) is also affirmed at 'A', on 'Stable' Outlook, reflecting the Bank's overall credit metrics, particularly its improved profitability and good asset quality. The ratings are constrained by tight liquidity and low growth in non-interest income. The capital adequacy ratio is more than adequate, but remains lower than DB's peers. Liquidity has eased in the current year and the Bank has also successfully concluded a USD500mn international bond issue. However, should the positive trend in DB's liquidity not continue as expected, or if the Bank's capital adequacy weakens, this would place significant downward pressure on the FSR.
The Qatari market is a small one as far as retail operations are concerned. However, this is substantially mitigated by the country's strong economic growth, high per capita income and a supportive operating environment. With a strong business franchise focussed on retail, commercial banking and trade finance, DB is well positioned to benefit from economic growth in Qatar. In 2011, the Bank increased its net interest income, by reducing its funding cost and expanding its loan portfolio. Growth in net profit picked up considerably due to renewed growth in operating profit and lower risk charges.
The Bank had adopted a more conservative credit policy since 2008, in response to higher credit risks. Asset quality improved further through write-offs in 2011. Although loss reserve coverage has fallen, additional coverage is provided by an increased allocation of equity to the risk reserve.
Doha Bank was established as a joint-stock company in 1979. Following a special issue of shares in 2009 and January 2011, the Bank's single largest shareholder is the Qatar Investment Authority, with 16.67%.
With total assets of USD14.4 billion, DB ranks fifth in the CI peer group of Qatari banks, at end 2011. In Qatar, DB operates a domestic network of 38 full service branches. The Bank also operates an extensive, international network which comprises overseas branches in Dubai and Kuwait, (and a new branch due to be opened in Abu Dhabi), as well as a broad network of representative offices in Shanghai, Tokyo, Istanbul, Singapore, Seoul, London and Frankfurt.
REGULATORY DISCLOSURES
The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence had access to the accounts and other relevant internal documents for the purpose of the rating, and considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.
The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in November 1989. The ratings were last updated in April 2011.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com.
