Mubasher: Moody's Investors Service announced that it has downgraded the Commercial Bank of Qatar’s (CBQ) long-term deposit ratings to A3 from A2 and its short-term deposit ratings to Prime-2 from Prime-1. The outlook on the rating is negative. 

The bond credit rating business of Moody's Corporation also declined the lender’s baseline credit assessment (BCA) to ba1 from baa3, according to Moody’s recent report.

Moreover, the long-term Counterparty Risk (CR) Assessment has been decreased to A2 from A1, Moody's said.

The downgrade of CBQ's long-term deposit ratings reflects the drop of the bank's BCA by 1 notch, it added. 

“CBQ's long-term deposit ratings continue to benefit from four notches of uplift reflecting Moody's view of a very high likelihood of government support if needed,” the New York-based rating agency said in a report.

On the other hand, the downgrade of CBQ's BCA reflects pressures on the bank's solvency arising from deteriorating asset quality, weak profitability and moderating capital adequacy.

It is worth noting that the bank's capital adequacy has decreased due to high loan growth, weak profitability and the impact of the introduction of IFRS 9, the report showed.

CBQ’s profits hiked 345% to QAR 405 million for the first quarter of 2018, from QAR 91 million in Q1-17.

In fiscal year 2017, CBQ's profits increased by 20.6% to QAR 603.65 million, compared to QAR 500.75 million in the year before.