| Qatar National Bank (Q.P.S.C.) | ||
| Rating Reaffirmed | ||
| Rating Action | ||
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| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A1+’ rating on the certificate of deposits programme of Qatar National Bank (Q.P.S.C.) - [QNB India; formerly Qatar National Bank (SAQ)]—the Indian branch of QNB. The rating is centrally based on the 'A/Stable/A-1' counterparty ratings of S&P Global Ratings on QNB.
The rating on QNB reflect the bank’s leading domestic banking franchise, its strong earnings capacity, high systemic importance in Qatar and the 50% ownership by the Qatari government. These strengths are partially offset by the bank’s high dependence on external funding, risk arising from expansion (especially in Turkey and Egypt), and deterioration of operating environment.
The rating on QNB India reflects its adequate capitalisation, backed by continued support from QNB. This strength is partially offset by early stage of operations.
In line with RBI's measures for COVID-19 pandemic, the branch has given moratorium to some of its borrowers, which provided some respite to the borrowers whose cash flows are impacted. Further, under the RBI’s August 2020 Resolution Framework for COVID-19-related Stress, the branch invoked restructuring on around Rs 50 crore (4.5%) of its portfolio as on December 31, 2021. Though the third wave of the pandemic has not disrupted the operations materially, any change in the payment discipline of the borrowers may affect delinquency levels and will remain a monitorable. |
Analytical Approach CRISIL Ratings’ rating on QNB India is centrally based on S&P Global Ratings’ counterparty credit ratings of 'A/Stable/A-1' on QNB. |
Key Rating Drivers & Detailed Description Strengths:
Tier-I capital adequacy ratio (CAR) and overall CAR stood at 26.87% as on December 31, 2021. Capital adequacy is backed by strong support from QNB, with QNB India receiving Rs 311.21 crore from the head office as initial capital, almost double the regulatory requirement. The CARs should continue to be supported by timely capital infusion by the head office to meet the regulatory minimum. Capital profile is further strengthened by nil non-performing assets (NPAs) as on December 31, 2021.
Weakness:
QNB commenced its banking operations in India through its Mumbai branch in 2017 and has long-term growth plans. The branch provides corporate banking solution to its clients. Total asset size was Rs 1,531 crore as on December 31, 2021 (unaudited) (Rs 929 crore as on March 31, 2021), out of which the loan book stood at Rs 1,106 crore (Rs 598 crore). Loan book size has grown exponentially in current fiscal after declining in the year ending March 31, 2021, as management adopted a cautious approach following the COVID-19 pandemic. Large part of the loan book is for working capital loans with strong focus on better rated corporates. The branch has an experienced management team with focus on maintaining adequate risk management systems for underwriting and monitoring of portfolio performance. As on December 31, 2021, the bank had nil NPAs. The branch reported 1 NPA as on fiscal 2021 which has been restructured. Nevertheless, given that the branch has recently commenced operations, the ability to grow the balance sheet while maintaining asset quality and profitability will be critical over the medium term. |
Liquidity: Superior Liquidity is supported by positive cumulative mismatch in all the buckets up to one year, as per the asset liability management statement as on December 31, 2021. Liquidity is also backed by excess SLR investments of Rs 340 crore (26% of net demand and time liabilities) as on December 31, 2021. Furthermore, the branch has access to the liquidity adjustment facility of Reserve Bank of India (RBI) to raise borrowings. |
Rating Sensitivity factors Downward factors
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About QNB Headquartered in Doha, QNB was established in 1964, as the country’s first Qatari-owned commercial bank. The Government of Qatar has a 50% stake in the bank via the Qatar Investment Authority. QNB is listed on the Qatar Stock Exchange. It is present in more than 31 countries across three continents through subsidiaries, branches or representative offices. It is the largest bank in Qatar, Middle East and Africa, by total assets, loans, deposits, and profit. The opening in India is in line with its goal to be a leading bank in the Middle East, Africa, and Southeast Asia.
As on December 31, 2021, total assets were QR 1,093 billion (around Rs 21.9 lakh crore) and group CAR was 19.3%. Net profit for calendar year 2021 was QR 13.2 billion (around Rs 0.26 lakh crore). |
About QNB India QNB received its India branch banking licence from RBI in October 2016 and commenced operations in 2017. It caters mainly to the banking requirements of corporates and financial institutions by leveraging its capital strength and vast network across more than 31 countries in three continents. QNB has international experience in transaction banking (including trade financing), treasury services, and funding, which could be leveraged domestically. Currently, it operates through its only branch in Mumbai. |
Key Financial Indicators
*Provisional |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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