Fitch affirms Commercial Bank’s rating at ‘A’ with stable outlook

Doha, Qatar: Fitch Ratings has affirmed The Commercial Bank's (P.S.Q.C.) (CBQ) Long-Term Issuer Default Rating (IDR) at 'A' with a Stable Outlook. It has also affirmed its Viability Rating (VR) at 'bb+'.

 

According to Fitch, Commercial Bank’s IDRs, Support Rating (SR) and Support Rating Floor (SRF) reflects the strong ability of Qatar to support its banks, as indicated by its rating (AA-/Stable). Fitch stated, “The government has demonstrated a strong commitment to its banks and key public sector companies. The sovereign's capacity to support the banking system is sustained by sovereign reserves and revenues, mostly from hydrocarbon production, despite lower oil prices.”

 

In its report, the ratings agency cited Commercial Bank’s profitability improvement in 2018 and 9M19 as a result of strengthening operating income, lower operating expenses and relatively lower loan impairment charges. The cost to income ratio, which has been a constraint on Commercial Bank's profitability, continued to improve to 30% in 9M19 from over 40% previously, closer to the level of peers.

 

Fitch report also maintained that Commercial Bank debt issuance represented about 15% of total funding at end-3Q19, which helps diversify the bank's funding and maturity profile. Commercial Bank has a good stock of net liquid assets, with government securities, net interbank placements and cash balances less mandatory reserves covering about 30% of total deposits.

 

Joseph Abraham, Group Chief Executive Officer of Commercial Bank said: “This re-affirmation by Fitch of our rating with a stable outlook is due to the continued prudent economic management by the State of Qatar and the Qatar Central Bank, and for Commercial Bank it reflects the continuing strong execution of our five-year strategic plan.”

Including Fitch Ratings, Commercial Bank currently enjoys strong credit ratings from all the major ratings agencies. The Bank’s long-term outlook is rated A3 by Moody’s and BBB+ from Standard & Poor’s. All ratings with stable outlook.