Moody’s Investors Service (Moody’s) has reaffirmed the long-term deposit rating of Qatar Islamic Bank (QIB) at ‘A1’, with a stable outlook.
Moody’s said in its credit opinion report that QIB’s assigned rating reflects the bank’s strong asset quality, strong and stable profitability, adequate capital and liquidity buffers, supported by its established and growing Islamic banking franchise and exceptional cost efficiency, adding that the bank’s stable outlook also takes into account the stable outlook on the Qatari government’s bond rating of Aa3.
On the bank’s profitability, Moody’s said, “QIB has consistently reported strong and broadly stable profitability.
This performance is supported by the strong financing growth, which itself reflects the increasing penetration of Sharia compliant assets in Qatar, and robust and improving cost efficiency.
“This is also in line with the bank’s business strategy, which was adopted in 2012, reorienting its assets towards financing from investing and towards local operations from international operations.
The bank’s profitability is also supported by exceptional efficiently with a cost to income ratio of 18% in Q1 2021, improving further from 21% in 2020 and the strongest in the system, and a solid net profit margin of 2.6% during Q1 2021 compared to 2.5% during 2020.”
The report mentioned, “QIB has experienced rapid financing growth with the bank’s compound annual growth rate was 14% over 2012-19 (for gross loans), compared with the Qatar market average of 9%.
The bank’s asset quality is supported by increased exposures to the Qatari government and semi-government entities which are of high credit quality and have historically demonstrated zero default rates.
”Moody’s added, “QIB’s adjusted nonperforming financings was 1.4% comparing favorably with the 2.0% average for the Qatari banking while the bank’s NPFs coverage ratio remained strong at 92% as of the end of 2020.
At the same time, we expect QIB’s capitalisation to remain broadly stable, substantially above regulatory requirements and above the bank’s internal minimum targets over the next 12 to 18 months, supported by healthy internal capital generation that balances high asset growth.”—Gulf Times