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Fitch Ratings Agency Affirms Doha
Bank Rating at “A”, Outlook “Stable”
21 November 2019
Fitch Ratings has affirmed Doha
Bank's (DB) Long-Term Issuer Default Rating (IDR) at 'A' with
“Stable Outlook”.
Doha 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 to 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, including DB.
Nevertheless, the assessment made
by Fitch Ratings of DB's standalone creditworthiness is
underpinned by the well-established domestic franchise in Qatar
of the fifth-largest bank, with market shares of about 6%-7% in
loans and deposits at end-1H19.
DB's non-performing loans (NPL)
ratio improved slightly in 9M 2019, due mainly to QAR 537.0
million write-offs, while loan growth (about 9%) was at the
higher end of peers'. NPL origination (net new NPLs/average
performing loans) also remained high (9M 2019: 1.7% annualized),
although it has decreased from its peak (2018: 2.3%). Total
reserve coverage of impaired loans was 141% at end of Q3 2019.
However, specific coverage of Stage 2 loans was just 8%.
Real-estate exposures are typically well covered with
collateral, although collateral realization could be a lengthy
process.
DB's FCC ratio of 12% at end of Q3
2019 was lower than most peers'. It fell materially in 2018, due
primarily to the impact of IFRS9 implementation but has since
improved slightly. The improvement reflected the optimization of
RWAs - including growth in lower-risk weighted Qatari sovereign
securities - and a lower dividend pay-out in 9M 2019. DB's high
coverage of NPLs mitigates risks to capital from existing
impaired loans.
Dr.
R. Seetharaman, Chief Executive Officer of Doha Bank, said that
“Fitch ratings recognized support of Qatari authorities for
banking system in Qatar. The government has demonstrated a
strong commitment to its banks and key public sector companies,
which has been reaffirmed during past crisis. The reforms such
as new investment law, real estate law, PPP Law, food security
and tourism and Free trade zone development will contribute to
Qatar’s non hydrocarbon segment.”
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