Qatar National Bank Ratings Affirmed 

(MENAFN Press) Capital Intelligence (CI), the international credit rating agency, announced today that it has affirmed Qatar National Bank's (QNB's) Financial Strength Rating (FSR) of 'AA-', as well as its Long and Short Term Foreign Currency (FC) Ratings of 'AA-' and 'A1', respectively, which are at the same level as the Sovereign Ratings for the State of Qatar. The Bank's Support Rating of '1' is also affirmed, reflecting 50% ownership by the State of Qatar through the Qatar Investment Authority. The Outlook on all Ratings is 'Stable'.

The ratings reflect continuous improvement in the Bank's performance and financial condition and its very strong credit metrics. The Bank's FSR also reflects a robust and supportive operating environment, QNB's market leadership in Qatar, and a geographically diversified franchise at both a regional and international level. Although the Qatari retail market is a small one, this is substantially mitigated by the country's strong economic growth and high per capita incomes.

The ratings are supported by the Bank's fine asset quality, improved capital adequacy and high profitability. QNB has demonstrated sound risk management, with a low NPL ratio and more than full loss reserve coverage, reflecting its high quality loan portfolio. The Bank has consistently delivered high performance. Its outstanding cost to income ratio and resilient net interest margin, combined with strong growth in total assets, to produce the highest net profit amongst GCC banks in 2011. QNB's capital adequacy, which improved significantly following a substantial increase in equity capital, is a key source of balance sheet strength, which underpins the Bank's growth potential. The increase in capital also provided a useful addition to the Bank's stable sources of funds, in a year when growth in loans exceeded that in customer deposits.

The ratings are constrained by the Bank's tighter liquidity, customer deposit concentration and volatility in banking system liquidity. In 2011, liquidity tightened and maturity mismatches increased, as the Bank grew its loans at a rapid pace within a falling interest rate environment. This constraint is mitigated by QNB's strong brand and credit profile, which support its ability to raise funds in Qatar and internationally. However, customer deposit concentration risks could be exacerbated by outward capital flows, an ingredient of Qatar's long-term development and diversification strategy.

The Bank was founded in 1964 as the first Qatari-owned joint stock commercial bank in the country. At end 2011, QNB was the largest amongst GCC banks, in terms of total assets (USD83bn) and net profit (USD2.1bn). In Qatar, the Bank operates a domestic network of 60 branches. QNB's international operations have been gradually expanded over the years and cover 24 countries, including branches in London, Paris, Singapore, Yemen, Kuwait, and Oman, investments in associate banks in Jordan, Iraq, Tunisia, Switzerland, the UAE and Syria, as well as representative offices in other markets.

In February 2011, QNB completed the acquisition of a majority stake in Bank Kesawan, Indonesia. QNB is reported to be currently considering the acquisition of DenizBank (a Dexia Bank subsidiary), the ninth largest bank in Turkey, with total assets of about USD25bn. Such an acquisition would be a substantial advancement in the implementation of the Bank's international growth strategy, but could have implications in the future for the Bank's credit profile.

The ratings have been initiated by Capital Intelligence. The issuer participated in the rating process. 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 of the issuer for the purpose of the rating. Capital Intelligence 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 October 1986. The ratings were last updated in March 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.