The tightening of the liquidity ratios of CI-Qatar banks
The “well-capitalized” Qatari banking system as a whole has somewhat tighter liquidity ratios than in other markets, according to Capital Intelligence (CI), a global credit rating agency.
“The funding position of Qatari banks (and in particular the big players) is affected by the limited domestic retail funding base and the limited availability of deposits from non-government companies,” CI said.
As long as Qatari banks maintain good access to international financial markets for medium-term funding, funding will “be manageable”, especially as the government sector has shown itself to be both willing and able to add liquidity. whenever necessary, he said.
Emphasizing that the government of Qatar has a solid experience in supporting local banks; he said that at different times this support included the transfer of “difficult investments” and real estate loans to the state, as well as the injection of additional equity.
Recently, all banks could count on a sharp increase in government deposits to avoid any liquidity pressure following the Gulf crisis, he said, adding further that the government holds stakes in all Qatari banks. .
CI made these observations while revising the outlook for the Commercial Bank’s Long Term Currency Rating (LT FCR) and Autonomous Banks (BSR) rating to “stable” and upholding the LT FCR and FCR at short term (ST FCR) from Ahlibank to “A” and “A1” respectively.
CI also confirmed the Commercial Bank’s LT FCR and ST FCR at “A-” and “A1”, respectively, as well as its BSR of “bbb-”.
In the case of Commercial Bank, the rating agency said the revised outlook to “stable” reflects the more favorable trend in the Bank’s financial parameters, in part due to its new business model as the lender continues to shift the composition of its loan portfolios towards low risk sectors, with a downward trend in NPLs and improved coverage. The capacity to absorb credit losses is also improved.
The Commercial Bank’s LT FCR is placed three notches above the BSR to reflect the high likelihood of official extraordinary support when needed, he said, adding that this is based on the government’s strong track record in support for Qatari banks.
In the case of Ahlibank Qatar, CI said the lender’s LT FCR was placed two notches above the BSR to reflect the high likelihood of official extraordinary support when needed.
CI confirmed Ahlibank Qatar’s BSR of “bbb +”, basic financial strength rating of “bbb +” and extraordinary support level of high. The outlook for LT FCR and BSR remains “stable”.
Last update: March 16, 2021 19:38 PM