Mubasher: The Commercial Bank of Qatar (CBQ) faces asset quality pressures, according to a report by Moody's Investors Service published on Wednesday.
Strengthening capital and tightening underwriting standards will support the bank's performance, the report indicated.
"Non-performing loans (NPLs) for the Commercial Bank reached 4.3% of the loan book in June 2016, from 0.90% at the end of 2012, above the 1.5% average for the Qatari banking system," the report added.
Despite the broad resilient economic environment in Qatar supported by continued government spending on infrastructure projects, said the report, adding that the bank's asset quality has been pressured recently by some concentrated exposures to over-leveraged borrowers in the contracting and real estate sectors.
While Moody's expects a gradual stabilisation of the bank's domestic loan book, the rating agency expects future asset quality pressures to continue to stem from the bank's Turkish subsidiary Abank.
Moody's expects challenging operating conditions in Turkey to lead to higher NPLs at Abank over the next 12 to 18 months, exerting further pressure on the group's loan quality and profitability.
