Moody’s Re-affirms QIB’s A1 Rating with Stable Outlook

May 30, 2021 by Qanect

Moody’s Investors Service (Moody’s) has reconfirmed 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 QIB’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 that “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 Credit Report also mentioned that: “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 in its report: “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 12-18 months, supported by healthy internal capital generation that balances high asset growth.”

Commenting on the latest rating, Mr. Bassel Gamal, QIB’s Group Chief Executive Officer, said: “We are pleased with our latest rating by Moody’s Investors Service. It has re-confirmed the strong financial position of Qatar, the banking sector outlook and QIB’s financial vigour, which has been steadily improving in line with our long-term objectives. It is also a confirmation of QIB’s stability, sustainable business model, high asset quality and robust capital position.”

“We will remain committed to the highest work standards, and we will continue implementing our long-term business strategy with a continued focus to contribute to the growth of the local economy, while always being ready to navigate any potential challenges.” Mr. Bassel added.

QIB has recently announced the results for period ended 31 March 2021. Net Profit attributable to the Shareholders of the Bank amounted to QAR 750 Million for the period ended March 2021 representing a growth of 9.1% over the same period in 2020. Total Assets of the Bank has increased by 8.5% compared to March 2020 and 3.4% compared to December 2020 and now stands at QAR 180 Billion driven by the continued growth in the financing activities. Financing activities have now reached QAR 125 Billion having grown by 9.8% compared to March 2020 and up by 5.1% compared to December 2020. Customer Deposits of the Bank now stand at QAR 126 Billion registering a growth of 14.3% compared to March 2020 and up by 6.6% compared to December 2020.

For more information, please visit: www.qib.com.qa