Commercial Bank’s Ratings Affirmed with a Stable Outlook

(MENAFN- Capital Intelligence Ltd) 26 February 2026

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed the Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) of Commercial Bank (CB or the Bank) at ‘A-’ and ‘A1’, respectively. At the same time, CI Ratings has affirmed CB’s Bank Standalone Rating (BSR) of ‘bbb-’, Core Financial Strength (CFS) rating of ‘bb+’ and Extraordinary Support Level (ESL) of High. The Outlook for the LT FCR and BSR is Stable.

The Bank’s LT FCR is set three notches above the BSR to reflect the high likelihood of official extraordinary support in case of need. This is based on the single largest shareholding being by the government through the Qatar Investment Authority and the government’s strong track record of both equity and liquidity support for Qatari banks. The government’s financial capacity to support the Bank is strong given Qatar’s sovereign ratings (‘AA’/‘A1+’/Stable).

CB’s BSR is based on a CFS rating of ‘bb+’ and an Operating Environment Risk Anchor (OPERA) of ‘bbb’. The latter reflects Qatar’s very strong external balances, including very high current account surpluses, as well as increasing foreign exchange reserves and significantly declining external debt. The OPERA also reflects the low risks to domestic political stability, Qatar’s abundant hydrocarbon resources, and the continued reforms by the government that have been gradually diversifying the economy and reducing labour market segmentation. Geopolitical risk factors continue to weigh on the OPERA, something that is always the case in this region.

The CFS is supported by good capital ratios, a comfortable liquidity position and a good franchise as the third-largest bank in Qatar. These credit strengths are, however, counterbalanced to some degree by rising NPLs in money terms and the effect on credit loss absorption capacity of less than full loan-loss reserve (LLR) coverage. Although liquidity metrics are satisfactory, the Bank still has a higher reliance on wholesale funding compared to most of its peers, while customer deposit growth had been weak until last year. The level of non-resident deposits at end-2035 was 14%, which we do not see as being high. After two years in which lending showed a fall, growth resumed in 2025. Total assets and customer deposits also grew. Stronger loan growth was accommodated in part by a reduction in central bank balances, although amounts due from other banks grew, as did securities balances.

Although the corporate loan portfolio is well-diversified by sector, the planned reduction in the share of lending to the more cyclical real estate sector remains a work-in-progress, despite some solid progress to date; at end-2025, this still comprised 19% of the loan portfolio. This remains a key loan portfolio-related aim of the current strategic plan. Another is to raise the share of lending to the government sector and to government/public sector names in general; again, progress is being made.

CI expects loan asset quality and credit loss absorption capacity metrics to improve this year. Despite NPL growth in money terms, rising gross loans saw the NPL ratio remain almost unchanged – and at a level that is closer to that of the sector median. The percentage of Stage 2 loans is only a little above the peer average but remains high enough to indicate that further NPL growth in money terms is possible for this year as well. CB continues to have a higher-than-average dependence on wholesale funding, particularly in relation to longer-term funding. Neither the liquidity coverage ratio nor the net stable funding ratio are publicly disclosed. Increase interbank placements in 2025 restored the interbank ratio to above 100%.

Operating profitability slipped a little in 2025. This came despite a still stronger-than-average net interest margin by sector standards, albeit down by 13bps on the level seen in 2024. The cost-to-income ratio rose again, but only very slightly, and was close to the peer average – although the latter is low in absolute terms. Profitability at the net level declined sharply, with the ROAA dropping by 63bps, albeit only to a level that was almost exactly as that of the peer group median. The drop was mainly a reflection of a restoration of loan-loss provisioning to a level more typical of the pre-2024 period. Despite the decline in profitability metrics in 2025, there is now some upward pressure on the CFS. This reflects the progress that has been made in addressing asset quality issues in the legacy portfolio and the likely positive impact on efficiency and profitability of the investments that have been made – and continue to be made – in digitalisation and the use of AI.
Rating Outlook

The Stable Outlook on the LT FCR and BSR indicates that the ratings are unlikely to change over the next 12 months.

Rating Dynamics: Upside Scenario

An upgrade over the next 12 months or a positive change in the outlook is seen as being unlikely at present. A Positive Outlook would require a marked improvement in loan asset quality, stronger credit loss absorption capacity, and a reduced dependence on wholesale funding.

Rating Dynamics: Downside Scenario

The most likely downside scenario would be a downgrade in the rating Outlook to Negative. Despite the recent improvements, the area of greatest weakness is still seen as being asset quality in general, and credit loss absorption capacity in particular. The other main area of vulnerability would appear to be operating profitability; although this remains satisfactory at present, this needs to remain in order to allow the Bank to restore LLR coverage to a satisfactory level.

Contact

Primary Analyst: Rory Keelan, Senior Credit Analyst; E-mail: ...
Secondary Analyst: Darren Stubing, Senior Credit Analyst
Committee Chairperson: Morris Helal, Senior Credit Analyst


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