Interview: Khalid Yousef Al Subeai
What role will sukuk (Islamic bond) issuance play in the market going forward?
KHALID YOUSEF AL SUBEAI: We set up a $2bn medium-term note sukuk programme in November 2015. Under this programme, the bank is expected to issue a benchmark US-dollar public transaction, with a typical benchmark size of approximately $500m before the end of 2016 or during the first half of 2017, depending on prevailing market conditions and opportunities.
As issuers in an Islamic format are of limited number in the state, we definitely think such an issuance would foster further issuances from Qatari entities in the corporate space.
What global ambitions are of interest to Qatar’s banks, given their successful local performance?
AL SUBEAI: There is an established level of maturity and expertise locally. We believe the existing platform can allow the exploration of value-adding propositions outside of Qatar. We did, in fact, open a representative office in the Dubai International Financial Centre in 2014. As a first step, we built up a portfolio of international loans that are secure, diverse and complimentary to our overall loan book. This has allowed us to gain comfort with credit outside of Qatar and we are exploring value-added joint venture propositions in both the GCC and MENA region. This is a high-level concept; however, we have identified consumer finance as a segment we would like to explore in the short to medium term.
Is there any argument that local banks will have to play a greater role in providing domestic credit?
AL SUBEAI: Qatari banks are both well prepared and capitalised to continue to support the nation’s ambitious development plans. The risk-reward analysis would suggest Qatar is the best geography for a local bank to deploy its capital, be it with government related entities, corporates, small and medium-sized enterprises, high-net-worth individuals or family offices. The local infrastructure market is highly promising; the government has committed significant multi-billion-dollar investment budgets to develop the state’s infrastructure including roads, transportation services and utilities. We see our participation as fundamental to contributing to infrastructure projects, whether it be on the government or private sector side. We are also equally confident that the Qatar Central Bank will continue to adopt sound liquidity managed policies for the banking sector to ensure adequate flow of credit to the local economy. With that said, banks will have to adjust to the current market dynamics, more so than before, and will have to be more stringent from a risk-reward perspective when deploying capital.
How can local banks, and particularly Islamic banks, better penetrate the local retail market?
AL SUBEAI: The Islamic retail banking business here in Qatar has a lot of potential to grow when one factors in the continued increase in Qatar’s population. We have strived to seize this opportunity by introducing new products in order to better establish our presence in this market in particular. Contrary to the generic approach in the market, our retail strategy revolves around a focused approach to have unique offerings for each particular market segment, with niche products and services.
With the increase in the population, the demand for retail banking services will grow for sure, but the future of retail banking lies with the advancement in the distribution channels and the banks’ approach towards customers. The role of retail banks going forward will move beyond their traditional role of addressing financial needs. The banks will have to get involved in social activities that will lead not only to deepening relationships with their existing customers but also enlarge the customer base in general.