S&P: Qatar banks progress

Standard & Poor's said that the overall credit profile of banks in the State of Qatar (A+/stable/A-1) has improved rapidly over the past three years, driven by high economic and lending growth, ample liquidity and strong customer confidence.

"Qatari banks' returns rose to stellar levels over the period, with a structural shift toward the modernization of the country's financial industry," said S&P credit analyst Anouar Hassoune.

Unprecedented private sector expansion, the government's large budget surpluses and the country's wide current account surpluses - stemming from high oil and gas prices and volumes - have helped boost returns, the agency said.

Although banks cannot sustain profitability at current levels, they have managed to strengthen and diversify core earnings generation, S&P said.

Along with other Gulf Cooperation Council countries, Qatar has opened up its financial services industry to regional players, S&P said, noting that in 2004, National Bank of Kuwait SAK (A/stable/A-1) acquired 20% (and management control) of Grindlays Qatar Bank, subsequently renamed International Bank of Qatar and Bahrain-based Ahli United Bank BSC bought 40% of Al Ahli Bank of Qatar, renamed Ahli Bank QSC.

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