Fitch Affirms Doha Bank Ratings at “A”
Stable
March 19, 2019
Fitch Ratings has affirmed Doha
Bank’s Long-Term Issuer Default Rating (IDR) at “A” with a
Stable Outlook. At the same time, the agency has affirmed Doha
Bank’s Viability Rating at “bb+”.
The Bank’s IDRs, Support Rating (SR)
and Support Rating Floor (SRF) reflect Fitch's expectation of an
extremely high probability of support from the Qatari
authorities for domestic banks in case of need. This reflects
the strong ability of Qatar to support its banks, as indicated
by its rating (AA-/Stable), combined with Fitch’s belief of a
strong willingness to support the banking sector and the bank.
The latter is based on a strong track
record of sovereign support to the banking sector including (a)
between 2009 and 1Q 2011 when some banks received capital
injections to enhance their capital buffers and the government
purchased some problem assets from the banks and (b) during 2017
when the Qatari authorities placed significant deposits across
the banks to support sector liquidity following the start of the
blockade between Qatar and some of its neighbors.
The government owns stakes in all
Qatari banks. Doha Bank’s SRF (support rating floor) is at the
Qatari bank's domestic systemically important bank (D-SIB) SRF
of “A”, and is not differentiated by franchise or level of
government ownership because we see an extremely high
probability that all rated Qatari banks would receive support
should they require it.
This belief also partly reflects the
risk of contagion (small number of banks and high concentration
of banks in the system) and the importance of the banking system
in building the local economy. The Stable Outlook on DB’s
Long-Term IDR mirrors that on the Qatari sovereign.
Dr. Seetharaman, CEO of Doha Bank,
said: “Given the changing dynamics of business, Doha Bank has
allocated its risk-weighted capital to optimize returns. The
Bank's operations have gained strength over the years, the
Capital Adequacy has reached 17% as of 31 December 2018, through
the strategic recruitment of shareholders' funds and the Bank
has achieved a net interest margin at rates higher than those
achieved by other banks.”
|