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QATAR:
A new era of growth
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2¬    Overview

     Forging a new
     path for growth
 Qatar’s economy is in expansion mode, with diversification and investment
 underpinned by the government’s ambitious Vision 2030 strategy.

     Q
               atar’s economy is charting an
               ambitious growth course, building on
               the positive momentum of the past
               two years when its inner resilience
                was reaffirmed under a diplomatic
     and trade embargo imposed in 2017 by some
     regional states.
        Economic prospects look healthy in 2019.
     The Qatar Central Bank is anticipating real
     GDP growth averaging 2.8% between 2018
     and 2020, amid rising spending on major
     projects – expected to rise by 15% this year.
     Economic growth has also been given a boost
     by the government’s 2018-2022 National
     Development Strategy, which envisages a
     greater role for the private sector.
        Meanwhile, foreign capital inflows have
     returned to the pre-2017 levels, while Qatari
     banking liquidity has improved. Official
     reserves suggest the position returned to pre-
     embargo levels; foreign exchange reserves rose
     to reach $52.7 billion in May 2019.
        The public finances have also recovered since
     2017. The country’s budget remains firmly in       of sustained increases in capital expenditures       and sound financial regulation and supervision
     surplus territory, expected to reach QR 4.35       in the last few years, the gradual pace of fiscal    frameworks and considerable buffers
     billion ($1.19 billion) in 2019, despite some      consolidation, ample liquidity, and increased        continue to underpin strong macroeconomic
     substantial spending commitments.                  private sector activity, notes the Fund.             performance. Increased gas production,
        The ongoing realignment of Qatar’s trading         Medium-term growth will be supported by           a slower pace of fiscal consolidation,
     relationships since 2017, with Turkey and Iran     increased gas production from the Barzan             infrastructure programmes and adequate
     figuring more prominently in its commercial        natural gas field, a planned increase in liquefied   credit growth will underpin growth over the
     routes, has helped the country to overcome         natural gas (LNG) production capacity by 40%         medium term.
     some of the punitive measures imposed on it.       to 110 million tonnes a year with the addition         Going forward, Qatar’s private sector is
        The IMF, in its Article IV assessment of        of four LNG trains by 2024. The Barzan gas           poised to take a more prominent role in
     Qatar’s economy released in June 2019, noted       production facility, valued at $10bn, is to be       building out the country’s most vibrant non-oil
     that GDP growth could reach 2.6% this year, a      commissioned in 2020, and will boost gas             sectors, such as manufacturing and services.
     rise on 2.2% in 2018, thanks to an underlying      production by 2 billion cubic feet a day.              Foreign investment is being promoted
     recovering in in the hydrocarbon output and           Inflation is under control, though could peak     through a strategy in which allowing 100%
     still robust growth of the non-hydrocarbon         at 3.7% in 2020 with the introduction of value-      foreign ownership figures strongly. The country
     sector.                                            added tax for the first time.                        has two major free zones offering a range
        The projected non-hydrocarbon growth for           The government’s fiscal policy is regarded by     of investment incentives, along with a well-
     2019 reflects the lingering multiplier effects     the IMF as an appropriate monetary anchor,           regarded legal system.

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                                                                                                                              Overview |       3

   The fruits of its pro-foreign investment                                                              Commercial Bank Group CEO Joseph
approach are already being felt. Qatar’s inward                                                       Abraham says that Qatar’s economy remains
foreign investments grew by 6.6% in the first                                                         in good shape, and the government continues
quarter of 2019, according to a joint study                                                           to invest heavily in strengthening the country’s
by Qatar’s Planning Ministry and the Central                                                          knowledge-based economy to secure the
Bank. Total foreign investments in Qatar had                                                          nation’s long-term future.
amounted to QR 722.6 billion ($199.7 billion)                                                            “Qatar has maintained its position as
at the end of the first quarter of 2019.                                                              the world’s biggest gas exporter, and a
   The focus on economic diversification is a                                                         budget surplus is expected to flow back
critical feature of government policy, explains                                                       into the economy with oil prices above the
Sheikh Abdullah bin Saud al-Thani, the Central                                                        government’s conservative assumed price.
Bank Governor.                                                                                        As in other parts of the region, the real
   “Various policy measures have been taken                                                           estate sector has weakened but good lending
in Qatar to promote economic diversification,”                                                        opportunities continue for Qatari banks in
he says. “The government has continued                                                                infrastructure development related to the
with several economic and structural reform                                                           World Cup in 2022 and energy projects as
measures to develop the non-hydrocarbon                                                               normal,” he says.
sector. These measures include improvement                                                               “Since the economic blockade was imposed
in the investment environment; encouraging                                                            in 2017, self-sufficiency projects relating to
of local manufacturing industries; expansion                                                          food security, manufacturing and logistics,
of new air and sea routes; visa-free entry;                                                           have been deemed a higher priority by the
investing in human resource development, fiscal                                                       government, creating new opportunities
reforms through expenditure rationalisation,                                                          for lenders and accelerating economic
etc. In particular, manufacturing, construction                                                       diversification,” says Abraham.
and increasing services products (transport,                                                             Fahad al Khalifa, GCEO of Al Khaliji Bank,
public services and banking activities) would                                                         is another prominent Qatari banker who
sustain the growth of non-hydrocarbon sector      domestic measures undertaken.                       is confident about Qatar’s macroeconomic
in the long-term.”                                   “Domestically, our primary focus in 2018         outlook. “These exciting times hold massive
   Some of Qatar’s financial institutions         was on the utilities, transport and food            potential for country. Qatar’s transformation,
are contributing strongly to this effort. To      security sectors as well as 2022 FIFA World         as outlined in its National Vision 2030, is
promote the diversification of economy, Qatar     Cup infrastructure projects. We have also           well advanced and an entirely new domestic,
Development Bank is providing direct and          continued to support the SME sector, helping        self-sustainable economy powered by local
indirect financing to mandated sectors such       fuel growth in the economy. Internationally, we     businesses and entrepreneurs is shaping up,”
as (agriculture, industries, health, tourism      continue to witness underlying growth in our        he says.
and education), including small and medium        core markets of Turkey, and Egypt as well as           There is, says Al-Khalifa, unprecedented
enterprises. It also supports them in enhancing   from rest of our international footprint across     entrepreneurial and investment activity in the
technical skills and developing capabilities.     Asia, Africa and Europe,” says Al-Kuwari.           local market. “Robust industries, in services,
   Sheikh Abdullah notes also that steps have        The banking sector has been a beneficiary        trade logistics, food supply, commodities and
been taken to strengthen the resilience of        of efforts by the government to support             agriculture were born on the back of this
financial institutions and markets. All these     the economy, as well as insulate it from the        transformation. Furthermore, preparatory
would underpin higher economic growth on          negative effects of the embargo.                    works for the FIFA World Cup 2022, as well
sustained basis.                                     Qatari bank leaders attribute the positive       as mammoth infrastructural developments in
   Healthier public finances should also lead     macro-economic climate to the country’s non-        the country, promise to not only recoup but
to a reduction in public debt. The government     hydrocarbon diversification model and prudent       also, grow sectors that were impacted by the
was prompted to approach the debt markets in      fiscal management. “The country is currently        geopolitical developments of recent years,” he
2018, taking advantage of low interest rates.     witnessing mega infrastructure projects             says.
This enabled it to raise about $24bn, however     culminating towards the FIFA world cup in              “There have been many positive reforms to
debt levels are on courser to fall from 53% of    2022,” says Raghavan Seetharaman, CEO of            policy making under the visionary leadership
GDP in 2018 to 41% in 2021.                       Doha Bank. “The financial sector has a key role     of H.H. The Emir Sheikh Tamim Bin Hamad
   Leading bankers in Qatar see the               to play in achieving the Qatar National Vision      Al Thani to develop a global open economy,”
government playing a constructive role in         2030 owing to high level of capitalization          says Al-Khalifa. “The country has forged
helping develop the economy. They suggest         and by providing world class banking services       new trade alliances, is promoting public-
that this is creating opportunities for the       and products. Measures taken by the Qatar           private partnerships, relaxing the regulations
banks too. Qatar National Bank (QNB) CEO          Central Bank and the government have led to a       on foreign direct investment, enhancing
Qatar National Bank CEO Ali Ahmed al-Kuwari       robust growth in the financial industry. Qatar’s    ownership rights and easing visa requirements.
highlights that QNB’s strong results have been    financial sector will therefore be an enabler for   We are extremely confident in the macro-
achieved in part by aligning itself with the      Qatar’s economic transformation.”                   economic outlook and future of Qatar.”

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4¬   Interview: Qatar Central Bank Governor

 Building a stronger and
 more diverse Qatar
 With metrics improving and GDP growth reviving, Qatar Central Bank Governor Sheikh
 Abdullah bin Saud al-Thani is confident that the country has emerged stronger and fitter
 from the recent turbulent conditions.

 S
           heikh Abdullah is not one to dwell on the     agement of liquidity following the blockade but
           past. But the experienced Qatar Central       have now fully recovered and are ruling at higher
           Bank (QCB) Governor can be excused for        levels.. At end July 2019, reserves have increased
           a sense of satisfaction in helping steer      to QR 140.9 billion ($38.7 billion).
 the Qatari economy through some choppy waters              Rather than look back, however, Sheikh Abdul-
 over the past two years.                                lah prefers to look forward. He says the econom-
    “Recent experience has demonstrated the              ic outlook remains positive for 2019 and expects
 strong ability of Qatar to withstand stressful          improvement in many macroeconomic indicators,
 conditions,” he says. “Unlike some other coun-          especially fiscal and current account balances.
 tries, there is internal stability in Qatar. More-         “With the complete normalisation of cap-
 over, the Government and financial sector regula-       ital flows and strengthened macroeconomic
 tors have not only strengthened the resilience of       conditions, the negative impacts of the economic
 the economy in general and the financial sector         blockade have diminished completely in 2019,” he
 in particular, they also stand ready to proactively     says. “Even the risk of tightening global financial
 take corrective and supportive policy measures,         conditions, which we were earlier concerned
 whenever required.”                                     about, have subsided with major central banks
    The economic blockade had posed one of the           in advanced economies turning to a more dovish             Governor Sheikh Abdullah bin
 major challenges to the Qatari economy during           monetary policy stance. “                                         Saud al-Thani
 the last two years. However, the experience so             Recent GDP figures underscore a steady im-
 far has suggested that the economic blockade            provement underway. During Q1-2019, real GDP             So what is the Central Bank doing to ensure a
 had no significant economic impact. “Given the          growth increased to 0.9% at annual basis from         stable and strong financial environment?
 surprise nature, there were temporary distur-           0.3% in Q4- 2018.                                        Maintenance of financial stability has always
 bances, but mostly confined to the second half of          The growth momentum is expected to pick up         been a top priority for QCB, says the Governor.
 2017. Through relocation/realignment of trading         during 2019, especially during the second half of     “We have been very proactive in adoption of
 routes/partners, setting up of domestic pro-            the year.                                             international standards. We are at par with
 duction facilities in the SME (small and medi-             “There are several factors for the likely im-      advanced economies in implementation of Basel
 um-sized enterprise) - sector and other economic        provement in the growth outlook,” says Sheikh         III and Islamic Financial Services Board (IFSB)
 diversification measures undertaken, the Qatari         Abdullah. “First, energy prices are likely to         standards. In addition, we are continuously mon-
 economy, in fact, came out stronger and more            remain at an elevated level, which will further       itoring various developments on daily, weekly,
 diversified,” says Sheikh Abdullah.                     improve the external and fiscal balances. Second,     monthly and quarterly basis.”
    There are several ways in which financial sta-       the contribution of the hydrocarbon sector to            Based on the findings, suitable and timely
 bility and the resilience of the financial sector has   GDP growth will turn positive from negative,          policy actions are being taken up. “We have
 been strengthened. On the real economy front,           particularly with the Barzan gas field slated to      been continuously strengthening our on-site
 the demand prospects for Qatari natural gas             come on steam towards the end of 2019. Third,         and off-site supervision. Various Early Warning
 from Qatar remain bright. Moreover, the thrust          the non-hydrocarbon sector will be the inherent       Indicators are being regularly monitored and the
 towards diversification of the economy, human           driver of overall GDP growth, benefiting from         system is being developed,” says Sheikh Abdullah.
 capital development and ecological protection           economic diversification measures taken up the           Stress tests for various risks and scenarios
 should ensure sustainable and healthy growth of         Government.”                                          are being undertaken on monthly, quarterly,
 the economy.                                               In particular, manufacturing and services          half-yearly and ad hoc bases to evaluate the
    The figures appear to bear out this positive         products (transport, public services and banking      resilience of the banks and need for policy meas-
 message. Total official reserves have increased         activities) are expected sustain the growth of        ures, if any. QCB also publishes a comprehensive
 by 5.8% from the pre blockade position. At the          non-hydrocarbon sector. Overall, the Governor         analysis of the macro-financial stability on annual
 end of May 2017, reserves stood at QR 128 billion       expects real GDP growth to improve substantial-       basis in the Financial Stability Reviews (FSR).
 ($35 billion). These reserves were used for man-        ly during 2019.                                       The FSRs through transparent and rigorous anal-

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                                                      Qatar banking, finance & economy
                                                                                              Interview:
                                                                                                   – Interview
                                                                                                         Qatar Central Bank Governor |                              5

ysis enhances the confidence of consumers of the        tals of the economy,” he says. “Since, the sources    progress with five year plans to ensure the pro-
financial services, multilateral institutions, rating   of deposits are more diversified and include U.S.     gramme’s successful completion. “The financial
institutions and others.                                and various European and Asian countries, the         sector is an important sector that is heavily
   There is a legislative mandate for inter-regula-     risks from such deposits are also much less com-      involved in this vision. Especially with the nec-
tory coordination to strengthen financial stabili-      pared to the earlier composition of non-resident      essary transformation that fintech is bringing,
ty. The Financial Stability and Risk Control Com-       deposits.”                                            it will create opportunities in line with the long-
mittee (FSC) has been formed with members                  Having demonstrated their resilience, is it now    term goals of the Qatar National Vision 2030,”
from the QCB, Qatar Financial Markets Authority         time for Qatar’s banks to become more ambitious       says Sheikh Abdullah.
(QFMA) and Qatar Financial Centre Regulatory            in their lending approaches?                             One of the main pillars of the QNV 2030 is the
Authority (QFCRA). They regularly monitor and              Domestic credit has been continuously grow-        economy. Fintech has a direct hand in helping
suggest policy measures pertaining to regulation,       ing and was not affected by stressful condi-          develop this aspect of the vision in a number
supervision and inter-regulatory co- ordination         tions. “Given the thrust on diversification of the    of ways, says the QCB Governor. It will bring
for maintenance of financial stability across           economy and promotion of private enterprises,         diversity across the sector in terms of delivering
different segments of the financial sector.             we expect the banks to become more ambitious          efficient services. It will also support emerging
   Supervision is a key focus for QCB. Banks            in their lending and play a greater role in the       enterprises of different sizes in Qatar. Perhaps
started implementation of IFRS 9 with effect            economic development of Qatar,” says Sheikh           most importantly, fintech will develop new
from January 1, 2018.                                   Abdullah.                                             financial instruments that will support the wider
   “In the initial stage of implementation, some           QCB is now actively framing a new approach         inclusion of people in financial services.
banks faced some problems for coverage of               to develop the country’s financial technology            The second pillar of the QNV 2030 is human
the Expected Credit Losses (ECL),” says Sheikh          (fintech) sector, an area that ratings agency         development. In this regard, Fintech is important
Abdullah. “The ECL was covered through the Risk         Standard & Poor’s recently said Qatar was best        as it helps introduce and create new sets of skills
Reserve maintained by the Banks. Risk Reserve is        placed to adopt in the region.                        required from the local workforce, enhancing and
maintained by banks at 2.5% of the total direct            “QCB has been working on fintech for some          diversifying the talent in Qatar.
credit facilities after deduction of specific pro-      time now. QCB’s role as a regulator in this sector       This will also lead to an increase in number of
visions, suspended interest and deferred profits        definitely pushes us to be at the forefront for       technologically-skilled workforce members and
for Islamic banks with the exception of credit          financial technological development,” says Sheikh     create a competitive labour market.
facilities to sovereign and credit facilities granted   Abdullah.                                                What about the future? What are the main
against cash collaterals. The Required Reserves            Recent progress has been backed up by sound        challenges and opportunities confronting Qatar’s
helped banks cover the ECL requirement on first         economic policies that are able to withstand          economy and financial sector?
implementation of IFRS 9. After covering the            changes and the current regional geopolitical            Over the medium to longer-term, as identified
ECL requirement through the Risk Reserve, banks         context that played against Qatar. Furthermore,       in the Qatar National Vision 2030 (QNV 2030),
are currently required to build-up Risk Reserve at      says Sheikh Abdullah, Qatar has proved its capa-      there are five challenges that require a proper
2.5% of the total credit facilities as earlier.”        bility to maintain a secure and resilient techno-     balance in the path to development, says Sheikh
   The impact of implementation of IFRS 9 on            logical infrastructure, as shown by its stability     Abdullah.
banks were not significant, says Sheikh Abdullah,       despite the increased waves of cyber-attacks it
especially on the Domestically Systemic Impor-          is facing.                                            They are:
tant Banks (DSIBs), as their capital adequacy              QCB is actively playing a key role in the devel-   • modernisation and preservation of traditions;
ratio was much above the minimum requirement            opment of the sector, through enacting regula-        • the needs of present and future generations
mandated by QCB. Some small banks were                  tions that will allow for a sustainable develop-      • managing of growth and uncontrolled expansion
affected, but no bank’s capital adequacy ratio          ment of Fintech. “QCB understands that there is       • the size and the quality of the expatriate labour
fell below the minimum requirement mandated             a real growing need to process an ever-increas-       force and the selected path of development
by QCB.                                                 ing amount of data whilst always delivering new       • economic growth, social development and envi-
   Rising domestic deposits and improving asset         streamlined experiences to consumers and users        ronmental management.
quality are other indicators that the banking           of financial services in Qatar. These advance-
sector has overcome severe stress conditions.           ments require further technological develop-             Economic diversification provides oppor-
And, notes the Governor, during those stressful         ments and capabilities in the country,” he says.      tunities for creating social and physical infra-
conditions, there was no impact on the high qual-          A dedicated FinTech section will oversee           structure that will help in achieving sustainable
ity of assets of banks in Qatar, with the NPL ratio     such developments by introducing a regulatory         growth and generating employment opportuni-
continuously ruling significantly below 2 percent.      sandbox. QCB will also rely on leveraging the         ties in Qatar.
   Deposits have grown from the pre-blockade            existing and constantly developing technological         “Since 2017, many new companies have
levels. Sheikh Abdullah says it is particularly         ecosystem of Qatar to support successful fintech      registered for various business activities, and
noteworthy that non-resident deposits that              growth.                                               manufacturing sector has emerged as the key
had declined in the immediate aftermath of the             Fintech has been used as a digital transforma-     drivers of growth. In terms of food security, Qa-
blockade have now fully recovered and are ruling        tion tool for financial services with a long- term    tar has largely become self reliant in major dairy
above the pre-blockade levels.                          development worldwide. Indeed, Qatar has also         products. Domestic food supply has improved
   “This not only indicates total recovery of           incorporated it alongside the Qatar National          substantially and has been one important factor
deposits, it also points towards restoration of         Vision 2030 to aid it in achieving national goals.    for benign food prices since the second half of
confidence of outside investors in the fundamen-           The National Vision involves tracking the          2018,” says Sheikh Abdullah.

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Q&A – Abdulla Mubarak Al Khalifa
Acting Chief Executive Officer QNB Group
How is QNB’s performance shaping up in 2019?                However, despite these headwinds, QNB Finansbank
What is driving profits and growth?                         increased its deposits by 25% in local currency terms
The first half of 2019 presented a good momentum of         and -1% in US dollar terms year-on-year in Q2 2019.
growth in the private sector in both Qatar and Egypt.       QNB Finansbank’s loans and deposits are roughly
The expectation for the rest of the year is to continue     around 10% of the Group’s, thus limiting the impact
on a similar trajectory with profitability and efficiency   on the overall Group figures.
ratios to be maintained close to current levels.               The impact of the devaluation was mitigated by
   QNB’s strategy is to pursue sustainable, profitable      the robust asset quality of the QNB Finansbank
growth. We continue to experience strong growth in          retail, SME and corporate portfolios. The retail and
all our three core markets Qatar, Turkey and Egypt          SME portfolios are predominantly denominated in
as well as from the rest of international network.          local currency, thus limiting any asset quality issues
The strength of our capital allowed us to grow our          due to the devaluation. The corporate portfolio
balance sheet in a controlled way and capitalise on         has foreign currency loans, however these are to
opportunities across our network. Furthermore, our          businesses which primarily generate cash flows in
strong credit rating and a stable long-term outlook         foreign currencies. We also have project finance
with the leading credit rating agencies enabled us to       lending in foreign currency, which is repayable
access capital markets for funding our growth plans.        through foreign currency flows. Total foreign                Abdulla Mubarak Al Khalifa Acting Chief
                                                            currency loans represent 30% of the overall loan                  Executive Officer QNB Group
In Q2 2019, total assets grew by 5% to QAR887               portfolio at QNB Finansbank.
billion – the bank’s highest ever. What explains                                                                       domestic business to maintain our market-leading
this achievement?                                           QNB’s cost to income ratio has moved down                  position. QNB Group is committed to invest in
The growth in assets was driven by a 5% growth              below 26%, and is considered among the region’s            Qatar’s future and it continues today with significant
in loans and advances, which reached to QAR 634             best ratios. Why have cost controls been so                financing support deployed on major projects, in
billion, equivalent to USD 174.3 billion. In Q2 2019,       important to the bank?                                     addition to its overall SME value proposition with
the bulk of the growth in lending came from Qatar           QNB’s focus is on continuous improvement. Our drive        sector specific lending programmes. Furthermore,
and Egypt, particularly the private sector. Moreover,       for operational efficiency is yielding cost-savings in     we have partnerships and alliances with various
asset quality remains high with non-performing loans        addition to sustainable revenue-generating income          government and private sector associations to
(NPLs) steady at 1.9% which one of lowest in region         streams. We target efficiency enhancement by               accelerate entrepreneurship in the private sector.
and for peers for similar size. Profitability remains       leveraging technology and streamlining our processes       These initiatives have led to substantial growth this
solid with returns on equity (ROE) close to 21% and         to ensure better customer experience. Over the last        year in the SME business across a range of sectors.
efficiency ratio improving to 25.6%. QNB continues          several years, we have been focusing on channel               In retail banking, our focus and investment remains
to be well capitalised with the capital adequacy            migration to improve proximity and customer                on digital development and innovation. This year
ratio (CAR) at 18.4%, well above QCB and Basel III          experience. This initiative is already bearing fruit,      we enhanced almost every touch point to deliver an
guidelines. We continue to maintain our top tier credit     with fewer than 5% of retail transactions taking place     even stronger customer experience, supported by our
rating by leading international agencies, which is a        in our branches in Qatar in 2018. Moreover, internet       range of outstanding products and service. We will
testament to our financial strength.                        and mobile application penetration has grown to 73%        continue to focus on providing our customers with
   QNB has achieved these results thanks to executing       as more customers opt to carry out their banking           innovative products and outstanding service, allowing
on our strategy of maintaining our leading position         online and on the go. We have also extended our            us to grow and further diversify our business mix.
in Qatar and accelerating international growth.             digital touchpoints. More than a third of our branches        International organic expansion continues to be one
Domestically, our primary focus in 2018 was on the          in Qatar now have the capability to process cheques        of the key pillars of QNB Group’s strategy. Through
utilities, transport and food security sectors as well      electronically through ATMs and this will continue to      expansion, QNB aims to diversify its earnings and risk.
as 2022 FIFA World Cup infrastructure projects.             grow in 2019.
We have also continued to support the SME sector,              In addition, we continue to execute upon the            How do you view opportunities for M&A? Is this
helping fuel growth in the economy. Internationally,        programme initiated in 2018 to identify additional         a major focus for your bank?
we continue to witness underlying growth in our core        levers to generate revenue and cost synergies across       International expansion is one of the cornerstones
markets of Turkey, and Egypt as well as Asia, Africa        the Group. The primary objective of this initiative is     of QNB Group’s strategy to achieve its vision of
and Europe. Profit contribution from the international      to extract value across all business lines by leveraging   becoming one of the leading banks in MEASEA. As
network was at 35% as end of Q2 2019.                       capabilities, streamlining our global product offering     we pursue growth, we remain committed to prudent
   This performance will continue, allowing us to           and consolidating operations to improve efficiency         controlled expansion. The new markets of relevance
reach a growth of 6% to 8% in 2019 even with the                                                                       would be considered from the following perspectives:
repayment of some of the government loans.                  Where do you see appetite for loans headed?                the macroeconomic outlook, banking sector
                                                            Which are the most exciting future growth areas            attractiveness (penetration and growth potential), the
 Customer deposits seem to be growing in line               for you?                                                   ability to follow QNB’s existing customers, balancing
with loans and advances. Did the devaluation of             Looking into 2020 and beyond, the growth prospects         QNB’s risk appetite and regulatory requirements
the lira have any significant impact on the group?          are favourable and likely to provide tailwinds to our      for market entry. We will consider the potential of
The devaluation of the Turkish Lira and the                 growth trajectory.                                         acquisitions on a purely opportunistic basis if suitable
consequent economic slowdown came as a surprise.              We will continue to invest in our flourishing            targets are available in our target markets.
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Q&A – Commercial Bank of
Qatar GCEO, Joseph Abraham
What stands out for Commercial Bank’s                       The increase in consolidated operating profit was
financial performance in 2019?                           driven by careful management of operating expens-
Commercial Bank continues to show positive financial     es and positive contributions from fees and other
results in 2019 due to the strong execution of our       income. Operating expenses decreased 11.1% in H1
five-year strategic plan.                                2019 compared with the same period last year, a
   Net profit is up and we have strengthened our         result of careful cost control and savings from our
capital, with CET1 (Common Equity Tier 1) within our     insourcing programme.
11-11.5% minimum range. We continue to reshape
and diversify our loan book, with the strategic intent   How is the bank’s five-year
of decreasing our concentration in real estate and       strategic plan progressing?
increasing our share of high-quality government and      We are on track to deliver our five-year plan, which is
public sector loans.                                     now in its third year of implementation, and the mar-
   We have now provisioned the majority of legacy        ket is beginning to recognise the value of our strategy
exposures and we continue to de-risk legacy assets       and its disciplined execution. This year we won a
with significant single name concentrations. We con-     “Financial Innovation Technology Award” for our
tinue to focus on productivity enhancements through      first-to-market 60 seconds digital remittance service
digitization of operational processes and reduce our     which credits beneficiary accounts in seven countries
cost to income ratio down to closer in line with the     in less than a minute and expedites remittances to
market.                                                  more than 20 additional countries within 15 minutes
                                                         or the same day.                                              “We are on track to deliver
H1 net profits were up 9%. What                             The award reflects our investment in innovation
are the drivers for this performance?                    and technology through our wholly-owned subsidi-
                                                                                                                         our five-year plan, which
Net profit is the sum result of all the actions we are
taking to implement our five-year strategic plan. Con-
                                                         ary, Commercial Bank Innovation Services (CBIS).
                                                         It demonstrates that we can develop truly world-
                                                                                                                         is now in its third year of
solidated operating profit was QAR 1.29 billion ($350    class technology in-house in Qatar, that beats major            implementation, and the
million) at H1 2019, a 7% year-on-year increase and      international banks.
consolidated net profit was QAR 934 million ($256.6         Previously our technology and operations were                  market is beginning to
million) in H1 2019, representing a 9% year-on-year
increase.
                                                         outsourced to India but we have brought this
                                                         function back in-house via CBIS to take control
                                                                                                                        recognise the value of our
                                                         of innovation. Our strategic focus on transaction             strategy and its disciplined
  Key financial highlights for the Group for             banking is gaining momentum and CBIS is key to our
  H1 2019 compared to the same period in 2018            competitive advantage here by deploying the latest                      execution”
                                                         technologies that are shaping the future such as
 • Net profit of QAR 934 million, up by 9.2%             robotics, machine learning, artificial intelligence and          Joseph Abraham, Commercial
 •	Operating profit of QAR 1,295 million, up by         blockchain. CBIS has enabled us to apply new pro-                    Bank of Qatar GCEO
    6.8%                                                 cesses to our banking operations, improve creativity,
 •	Cost to income ratio of 29.9%, reduced from          adapt quickly, and deliver innovative digital products    In terms of management of operating expenses,
    33.9%                                                and services to our customers such as 60 seconds          what achievements have been made here – and
 •	Net provisions QAR 428 million, down by 1.7%,        digital remittances, e-gifts, an upgraded mobile          what ambitions do you have to keep a handle on
    NPL ratio reduced from 5.4% to 4.9% and cover-       banking application, a new trade portal, and remote       costs?
    age improved from 84.2% to 96.2%                     cheque scanning.                                          We have reduced our operating expenses consider-
 • Total assets of QAR 141.3 billion, up by 1%                                                                     ably since 2016 and moved our cost to income ratio
 •	CET1 improved from 9.7% to 11.0% and total           Why is transaction banking                                down from 45.7% in 2016 to 29.9% in H1 2019. Our
    CAR improved from 14.5% to 16.3%                     such a strong focus for you?                              approach to managing costs is not through large-
 •	Customer loans and advances of QAR 84.8              The future of banking is moving more and more             scale redundancies but rather investing in digiti-
    billion, down by 2.7%. Growth in domestic loans      towards transactions. Lending to customers requires       zation and automation to create leaner and more
    excluding Government temporary overdraft             you to retain a lot of capital and comply with a num-     effective internal processes to cut out waste and
    repayment and de-risking.                            ber of regulatory ratios. Capital adequacy require-       inefficiencies.
 • Loan deposit ratio 110.3%, down from 116.1%           ments are there for good reason, but transactions            We have reinvested these savings in new digital
 •	Best Cash Management Bank in Qatar award             offer a relatively risk-free alternative to lending as    products and processes, new branches and new staff
    for the third year in a row, and Best Transaction    they generate fee income that is not based on assets.     facilities.
    Banking service in Qatar from “The Asian Banker”     Customers will always need to transact, driving long-
 •	Best Retail Bank in Qatar award for the third        term revenues regardless if good lending opportuni-       Is further capital market
    year in a row and “Financial Technology Inno-        ties are plentiful or not.                                issuance being planned?
    vation Award 2019” for the 60 Seconds Online            Transaction banking is therefore a core part of our    Fundraising is a constant process of renewal and
    Remittance service and digital innovations           five-year strategic plan because it offers a way to       further capital market issuances are planned as part
                                                         grow sustainably.                                         of our normal course of business.
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Q&A – Masraf al-Rayan
Group CEO Adel Mustafawi
How is profitability and revenue performance                multiple favourable issuance windows. The Qatari
holding up for Masraf al-Rayan this year?                   market in particular crossed a significant milestone
Masraf Al Rayan (MAR) operating income has                  since we have seen Qatari issuers return to the public
increased 4.8% for the period ended June 30, 2019 as        market for the first time since the blockade, albeit with
compared to same period last year. We are expecting         great success.
consistent growth in coming months to achieve overall          Looking ahead, we believe lower underlying rates
profitability of the bank for the year 2019.                will push debt market investors to drift towards strong
                                                            emerging market (EM) paper offering a pick up. On
What impact have market conditions had on                   the other hand, EM investors remain mindful of the
the bank, and how has the government and the                downside economic risk and will also stick to the EM
Central Bank helped ensure stability?                       issuers with solid fundamentals. The combination of both
There has not been any negative impact on our               trends should offer attractive entry points for Qatari
bank, induced by the ongoing blockade because the           issuers on a fixed-rate basis in the coming months.
government has taken, through its central bank and             Higher credit ratings of the banks in Qatar, as well
the sovereign wealth fund, wise decisions from the          as the low risk environment in which they operate,
beginning, in order to make ample liquidity available for   should also attract for them cheap funding through
the banking sector. This has helped to ensure stability     debt capital markets.
in the system, while individual banks have been
carrying out their own day-to-day operations. MAR           What other moves is Masraf al-Rayan undertaking
grew its total assets by 5.4%, in year-to-date terms.       to diversify its funding sources?                                        Masraf al-Rayan
MAR has experienced the best of times, even at the          Masraf Al Rayan’s funding strategy relies on three
                                                                                                                                 Group CEO Adel Mustafawi
height of the blockade, because it is an integral part of   pillars: deposits, bilateral financing through a strong
the country’s economy.                                      and growing network of financial institutions and           size of our Sukuk programme from $1-2 billion to give
                                                            Sukuk financing. We have seen positive developments         us more flexibility in the future.
Are market conditions for debt raising                      in each segment over the past 12 months: We have
increasingly favorable, and will more issuance be           seen international deposits returning after the             Do you have plans for growth – whether organic
forthcoming?                                                blockade; we signed our debut $500 million 3-year           or inorganic – in Qatar and overseas markets?
Having an updated Sukuk programme, we remain open           syndicated Murabaha facility in October 2018; we            MAR has always plans to grow locally and
to sukuk funding exercise on an opportunistic basis. We     issued a debut private placement in November 2018           internationally depending on regional and global
believe that Q1 2019 offered an amazing market across       ($190 million 5-year). Each pillar is accessed on an        situations. Currently, we do not have any concrete
asset classes and debt capital markets witnessed            opportunistic basis and we have recently increased the      agenda but we are looking at various options to expand
                                                                                                                         into the European markets, as well as in some Asian
                                                                                                                         countries.
  Masraf Al Rayan (was incorporated as Qatari               • Shareholders’ equity reached QAR 12,859 million
  Shareholding Company under the Qatar Commercial           compared to QAR 12,267 million as of 30 June 2019,          How is the bank adapting to international capital
  Company law, on 4th January 2006, and licensed by         a growth of 4.8%                                            and liquidity requirements?
  Qatar Central Bank. As per its Articles of Associa-                                                                   All Qatari banks are following Basel-III guidelines
  tion; the Bank is engaged in banking, financing and       Financial Highlights                                        under the umbrella of Qatar Central Bank (QCB). MAR
  investing activities in conformity with the Principles    • Return on average assets continues to be one of           has strong capital position – the best in the Qatari
  of Islamic Shari’a. Headquartered in Doha, with a         the highest in the market at 2.16%                          market. Regarding liquidity requirements, MAR is
  paid-up capital of QAR 7.5 Bn (USD 2.1 Bn), it was        • Return on average shareholders’ equity reached            complying with international ratios and working on
  launched on October 2006.                                 16.50%                                                      various long-term solutions to diversity its liquidity
                                                            • Earnings per share amounted to QAR 0.144 com-             position.
  Financial Statement for the first half of 2019 :          pared to QAR 0.142 for the period ended 30 June
  • Total assets reached QAR 102,543 million com-           2019                                                        Are you confident that demand for Sharia-
  pared to QAR 100,455 million as of 30 June 2019, a        • Book value per share reached QAR 1.71 compared            compliant banking services will continue to
  growth of 2.1%                                            to QAR 1.64 as of 30 June 2019                              grow?
  • Financing activities increased to QAR 74,800 mil-       • Capital adequacy ratio reached 19.45%, in line            Reuter’s Islamic Finance Development Report released
  lion compared to QAR 73,088 million as of 30 June         with Basel III standards and Qatar Central Bank re-         in 2018 shows that the global Islamic finance industry
  2019, a growth of 2.3%                                    quirements, compared to 18.75% as of 30 June 2019           grew by 11%, y/y, to reach $2.4 trillion in assets in
  • Investments reached QAR 20,496 million com-             • Operational efficiency ratio (cost to income ratio)       2017, up from $200bn in 2003. In the banking sector,
  pared to QAR 19,902 million as of 30 June 2019, a         is 23.47%                                                   Islamic banks outperformed conventional banks over
  growth of 3.0%                                            • Non-performing financing (NPF) ratio is kept at a         the decade, according to the IMF. The industry is
  • Customer deposits increased to QAR 64,412 mil-          low level of 0.74%, reflecting the strong performance       expected to continue with its current upward growth.
  lion compared to QAR 62,701 million as of 30 June         of our credit risk management as well as prudent            Sharia-compliant assets are, for example, projected to
  2019, a growth of 2.7%                                    policies and procedures                                     reach $3.8 trillion by 2023, averaging annual growth
                                                                                                                        of 10%, according to Reuters data.
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Q&A – Raghavan Seetharaman,
CEO, Doha Bank
Please comment on Doha Bank’s                               Due to competition from new entrants, narrowing
strong financial performance.                               profit margins and tighter regulatory requirements, the
Inaugurated in 1979, Doha Bank has posted consistent        bank perceives innovation as the key to growth through
growth over the last decade, with its total assets          alternate channels. The Bank will further improve
expanding by a compound annual growth rate (CAGR)           its efficiency by leveraging on strong distribution
of around 7%. Today, it is the third largest conventional   channels to expand loan book, generate incremental
bank in Qatar with a market share of 6.9% of assets         revenues and improve efficiency. The Bank will
at the end of June 2019, offering a range of domestic       continue with its digitisation program to increase the
and international banking services to its commercial,       overall efficiency. In line with banking industry trends,
corporate, institutional and retail customers.              areas of focus include collaboration with Fintechs,
   This well-diversified customer base is serviced          adoption of cutting edge technology, consolidating
through four business groups – Wholesale Banking,           mobile and online applications, upgrading security
Retail Banking, International Banking and Treasury          features, and developing call centres, which make use
& Investments, all of which work closely with one           of sophisticated voice recognition technology.
another to generate cross-selling opportunities across
the group. In line with its mission as a leading one-stop   What are some of the key initiatives
provider of financial services, the bank has undertaken     launched by Doha Bank in recent years?
a range of joint initiatives between the four business      In recent years, Doha Bank has implemented a number
groups in order to leverage cross-selling of multiple       of initiatives aimed at safeguarding and
products to customers.                                          strengthening its leadership position across a range                Raghavan Seetharaman,
   Doha Bank’s consistent expansion over recent years       of markets. On the retail front, for example, Doha
                                                                                                                                       CEO, Doha Bank
is due to a range of drivers, with diversification of the   Bank has maintained its leadership in the innovation
bank’s lending, customer base and funding sources           sphere by introducing many “First-in-Qatar” products,       selling, lending to the government and in the services
at the core. The various diversification strategies         services and channels to ensure that it stays ahead of      sectors. The bank has undertaken various joint
employed by the bank include but are not limited            the competition.                                            efforts to ensure cross-selling more than one product
to geographical, deposit and business segment                   Examples of recent launches include the Doha Bank       to the customer to ensure that the bank becomes
diversification.                                            ‘My Book Qatar’ app, biometric authentication in            the one-stop shop financial service provider by
                                                            mobile banking, the Apple iWatch banking app, tablet        providing comprehensive financial solutions to the
How are Doha Bank’s core                                    banking, the Al Asriya ladies’ banking package, online      customer covering all their relevant financial services
revenue streams looking?                                    money transfers via credit cards, mobile e-remittances      requirements.
Doha Bank’s core revenue streams comprises of               for payroll card customers, gold bar sales and green
interest, fee incomes and investment gains. Through         banking.                                                    What are your expectations for
initiatives such as changing the asset allocation model,        Doha Bank will continue to prioritise customer-         asset growth this year?
periodic re-pricing of its portfolio, and managing low      centricity by leveraging on big data, enhancing             As the bank has been adopting selective asset growth
cost deposits, the Bank continues to maintain its           distribution channels and using cutting-edge                model by keeping the optimum mix of lending portfolio
leadership position in Net Interest Margin. In line with    technology to ensure that customers’ needs and              and local sovereign fixed income book, the bank
its innovation strategy, the Bank launched Qatar’s first    lifestyle demands are engrained throughout the              expects a loan growth of about 5.7% for full-year 2019.
Exchange Traded Fund (QETF) as a tool for investment,       product offering.
which generated a total return of 20% in 2018,                                                                          What financing plans does Doha Bank have?
outperforming most exchange traded funds (ETFs) in          What are the main challenges facing Doha Bank?              The bank will continue to maintain the diversified
the world.                                                  And what are the key opportunities?                         deposit mix and funding base to minimise
   With a footprint in 17 countries, there is substantial   The main challenges facing Doha Bank relate to asset        concentration risk and enhance the lower cost deposit
scope for Doha Bank to leverage its extensive               quality in GCC branches. Regarding asset quality, at        base. At the same time, it will look into opportunities
network to cultivate closer trade finance relations         the end of June 2019, the bank’s NPL ratio stood at         for sourcing cheaper funding from the international
with companies doing business with countries where          5.83%. The bank is closely monitoring these accounts        market by leveraging its international footprint.
the bank has a presence. The bank regards selective         with a special focus on regularising them and
overseas expansion as a key contributor to further          consolidating its position to avert any one-off shocks.     Do you have any thoughts about M&A activity? Is
growth. Expansion to strategic locations enables the        With regards to liquidity, at end-June 2019, the bank’s     this on Doha Bank’s agenda?
bank to facilitate and optimize cross-border trade          loan-to-deposit ratio stood at 109.5%, compared             Historically, the bank’s growth model has been an
between countries such as Qatar, Kuwait, India and          to the system-wide average of 117.7%. However,              organic one. The bank has established six overseas
other key regional and global economies. Furthermore,       Doha Bank was able to garner liquidity through its          branches in Kuwait, UAE and India as well as
the extensive global network allows the bank to garner      international relationships and also at a minimal           representative offices in 14 countries. The international
liquidity through its international relationships at        cost. The bank will continue procuring cost-effective       network aims to facilitate and optimise cross-border
optimal cost.                                               liquidity, through its international network of branches    trade transactions between Qatar, Kuwait, India
                                                            and representative offices, and bring it to acceptable      and other overseas countries. However, given a right
What are the main elements of Doha Bank’s                   levels.                                                     opportunity with strategic value and synergy, the bank
strategy for enhancing efficiencies going forward?             The underlying opportunities arise from cross-           can explore this area as well.
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Q&A - Khalid al-Subeai, Group Chief
Executive Officer (GCEO) at Barwa Bank
Barwa Bank has posted regular double-digit                    The Bank’s drive for service excellence and
profit increases in recent years. What explains            expansion into untapped customer products
this strong performance?                                   and services is continuously evolving along with
To say that the past few years have marked a               customers and shareholders’ growing needs and
record performance for our group is to understate          expectations.
our enormous transformation, anchored by Qatar’s              We now have the scale to grow our client base
tremendous economic prosperity and growth story            geographically and contribute significantly to asset
   In the fiscal year ending in December 31, 2018,         and trade financing, and ultimately, establish a
we recorded a net profit of QAR 765 million – our          trusted name in the global financial and Islamic
highest ever – and crossed the QAR 44 billion mark         banking sectors.
in total assets, backed by over QAR 26 billion in
customer deposits. Our income from financing and           How significant is the merger
investing activities also exceeded QAR 2 billion, a        for Qatar’s banking sector?
4.6% increase over the previous year.                      It is fair to say that this merger is a national and
   With the government as our largest shareholder,         regional milestone, it is the first amongst the Qatar
our duty has been and remains to build and deliver         banking sector after obtaining the required approvals
on this momentum to meet the market’s changing
dynamics and Qatar’s growing banking needs.
                                                           from shareholders, authorities and the Qatar Central
                                                           Bank, I can say that it is an achievement for All
                                                                                                                         “To say that the past few
   Beyond this momentum, the consistency of                involved.                                                   years have marked a record
our double-digit profit figures in the last decade            This merger attracted a great deal of attention, in
has confirmed our growth strategy. Focally,                light of the transitionary period that GCC economies        performance for our group is
investments driving our bottom line have centred
on the streamlining and efficient integration of our
                                                           and banking sectors are experiencing. International
                                                           credit rating agencies and observers hold this merger
                                                                                                                       to understate our enormous
operations, as much as they have on diversifying
our revenue streams through growth in customer
                                                           to great expectations, further enhancing Barwa
                                                           Banks market share in the sector, making it the 3rd
                                                                                                                              transformation”
segments. Our growth strategy has translated               largest Islamic bank in Qatar and 6th largest bank              Khalid al-Subeai, Group Chief
strongly in our financial performance, and                 in Qatar.                                                  Executive Officer (GCEO) at Barwa Bank
successfully culminated with our landmark merger
with International Bank of Qatar (IBQ) this year.          What new products and services are under
                                                           preparation at Barwa Bank?                                you anticipating more funding opportunities in
How will the bank change in light of the merger            To put it simply, we’re eyeing a full digital             coming years from the domestic market?
with International Bank of Qatar (IBQ)? What               transformation in the next five years, rather than        Qatar’s economy is sailing through its post-blockade
benefits will be derived from this tie-up with?            a suite of products and services. And we are              recovery and entering a transformative era. We’re
We expect the merger with International Bank of            pouring the bulk of our investments, resources            moving from sustenance to sustainability in the
Qatar to bolster Barwa Bank Group’s strong financial       and infrastructure into digital innovation, be it at      lead up to the World Cup 2022 and in line with the
position, profitability and solidify our domestic          a consumer-facing or at an operational efficiency         National Vision 2030.
franchise in Qatar, particularly as the market gears       level – both of which weigh equal importance for             On the back of the blockade in the past couple of
up for the World Cup 2022 and makes steadfast              our business. This transformation will be, of course,     years, industries were expanded in the local economy
progress on our National Vision 2030. Our strong           catalysed by our merger with IBQ, which we know           away from the hydrocarbon sector, and directed
capitalization, larger scale and liquidity will allow      will be of great value to our group’s portfolio,          toward trade logistics, food supply, commodities and
the combined entity to play a key role in the local        particularly in the private banking and wealth            agricultural businesses, among many others.
economy and equally into large scale project               management segments.                                         Needless to say, the mega infrastructural
financing.                                                    This year, we created a new chief digital officer      developments and expenditure associated with the
   The merger with IBQ is built on a firm belief           role in our management team, and launched our             World Cup 2022, the integrated railway network, the
that was a partnership built on the synergy and            mobile banking app, which we are constantly               5G network rollout, and the planned new free zones
complementarity of our growth vision, human                upgrading toward an Omni-channel banking                  across Qatar will add tremendous growth prospects
capital, technological infrastructure and products &       experience for our customers.                             to all sectors.
services.                                                     Fintech is central to the future of our Group. We         In addition to the decision to expand the State of
   Guided by the Qatar National Vision 2030,               are exploring and heavily investing into technologies     Qatar’s LNG production from 77 million to 110 million
powered by our QAR 80 billion balance sheet                that will power, seamless, borderless and secure          tonnes over the next 5 years, which will ensure
post-merger and QAR 12 billion shareholder equity          transactions for our customers. Our corporate             accelerated growth in the economy, contracting,
base, and complemented by a strong client base of          internet banking experience has been a success case       energy and banking sectors, amongst others.
more than 80,000 customers; we are now able to             on this front, featuring sophisticated access controls,      The local market has plenty of room to grow and
capitalise on our solid financial position, longstanding   and enabling cross-border transactions.                   attract funding and foreign direct investments in the
expertise, robust infrastructure and cutting-edge                                                                    medium-to-long term. We’re building an entirely new
technology.                                                What is your view of Qatar’s economy? Are                 economy with much broader horizons.
Q&A – Fahad al-Khalifa,
GCEO, Al Khaliji Bank
Al Khaliji bank showed double-digit profit                   are confident we will continue to improve these for the
increases last year. What are the main drivers of            remainder of 2019.
the bank’s performance?
Al Khaliji’s guiding principle is to focus on generating     How important is the Qatar economy to your
safe stable revenues. We achieve this by investing in our    bank? Are you well positioned to benefit from
human capital, with particular focus on developing our       improved economic performance?
Qatari talent, and building long-term mutually beneficial    We are of Qatar, it is our core market and accounts for
relationships with our valued client base. By virtue of      almost 90% of our operating income. It goes without
being a relatively small bank we have an exceptionally       saying the performance of the local economy is key to
nimble approach. This affords us first mover advantage       us.
with our core Corporate and high net-worth (HNW)                The bank is very well positioned to benefit from
client segments and enables us to be their bank of           Qatar’s strong economic performance. Historically,
choice.                                                      we have participated in many transactions to fund
                                                             projects related to Government and GREs (Government
You have focused on improved balance sheet                   Related Entities). This is a result of strong relationship
management and lowering the cost of funding.                 management and customer service. Qatar had
How effective have these strategies been and what            announced a surplus budget for 2019 and expects to
expectations do you have for 2019?                           award projects of QAR 48 billion this year. These will
These strategies have been very effective and we             lend positively to the economy. In line with our strategic
can sum up our approach in recent times as “make             focus on the domestic market, we aim to support our
more from less”. We adhered to our guiding principle         clients in participating in these projects.                         “The bank is very well
of targeting safe stable revenues. We de-risked the
balance sheet, by divesting non-core overseas assets,        Are there any new business opportunities or new
                                                                                                                               positioned to benefit from
and increased the NIM on our remaining book of               lines of business that Khaliji Bank is interested in               Qatar’s strong economic
business.                                                    pursuing?
   Our results so far demonstrate that our strategy is       Al Khaliji is first and foremost a local bank and offers                 performance”
working. For H1 2019, while the overall balance sheet        a full suite of products and services to its Corporate
size has reduced year on year, our net interest margins      and HNW client base. Our wholesale business caters                           Fahad al-Khalifa,
and spreads have improved and profits are higher on          to Government, GRE’s and large local and international                     GCEO, Al Khaliji Bank
H1 2018.                                                     corporates and FIs. Our consumer business is focused
   Al Khaliji funds itself from a variety of sources, and    on the Private and Premium segment for Qataris and           education, health, sport and broader infrastructure
as the Qatari Riyal is pegged to the US Dollar, there        ex-pat professionals. The bank’s Treasury team supports      buildout. We will expand our international business
are a number of external factors influencing the cost        these businesses offering foreign exchange services          through support of government, and GRE, overseas
of funding for the bank. This makes it harder to predict     and related solutions. Therefore, we are present in all      investments where there is business case for al khaliji.
future cost of funding in a volatile rates environment.      major lines of business and will continue to grow our
However, this remains a key metric for us to control, in     customer base in the segments.                               What about M&A? Are mergers on the bank’s
our drive to improve the bank’s NIM and spreads. We             We see great opportunity locally in the spheres of        agenda?
                                                                                                                          As of now Al Khaliji is not envisioning a merger or
  About Al Khaliji Bank                                                                                                   acquisition. However, should the right opportunity arise,
                                                                                                                          we will study and analyse it carefully and make our
 Al Khaliji is Qatar’s pioneer “next generation bank”,       institution, the Bank must meet the needs of both            recommendations to the board of directors.
 offering a full range of conventional banking products      this generation and future generations of employees,
 and services to premium, business, corporate and            customers, investors and business partners.                  Do you expect non-performing loans to decline
 international customers in Qatar, UAE and France.              Al Khaliji was awarded with a positive Fitch              over the next year?
    Headquartered in Doha, Al Khaliji is one of Qatar’s      Rating. With a Long Term Issuer Default Rating of ‘A’        We have de-risked our balance sheet and ensure we
 leading banks and a member of the Qatar Exchange            and a Short Term Issuer Default Rating of ‘F1’, this         target safe stable revenues. Credit quality is a primary
 since 2007, with QR 58 billion in total assets and QR       facilitates streamlined access to resources all over         driver and we continue to remain prudent in our
 30 billion in customer deposits as of 31 December           the globe.                                                   approach to provisions.
 2017.                                                          In addition, Al Khaliji also has a strong Long Term          Based on QCB data, provision coverage on NPLs
    Al Khaliji France is Al Khaliji’s subsidiary in Paris,   Deposit Rating of A3 awarded by Moody’s.                     has averaged 80% for the period 2015 to 2018. From
 France, with a network of branches in the UAE cov-             Achieving financial objectives is critical to             January 2018, with the introduction of IFRS9, there is
 ering Abu Dhabi, Dubai, Sharjah, and Ras Al Khaima.         sustaining prosperity in any market, at Al Khaliji           also a requirement to carry a percentage provision for
 This branch network offers customers and businesses         long-term sustainability is maintained by balancing          all performing financial assets. Furthermore, banks have
 local, regional and international banking services.         the commitment to achieving results with the com-            historically carried a risk reserve in their balance sheets
    Al Khaliji products and level of service reflect         mitment towards the development of people and the            as a regulatory requirement. These collectively provide
 the Bank’s belief that to be a successful financial         community.                                                   a comfortable cover for any sudden deterioration in
                                                                                                                          credit quality of exposures of the banking sector.
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