With six local conventional commercial banks, four Islamic finance houses, seven foreign bank branches and a development bank, Qatar has a wide range of financial intermediaries. The conventional commercial banks are led by Qatar National Bank (QNB), which reported in October 2012 that its total assets had increased 25.3% since September 30, 2011 to reach QR351bn ($96.38bn). At the end of 2011 QNB’s total assets amounted to QR302bn ($82.9bn), according to its annual report. Meanwhile, its loans, advances and financing activities totalled QR238.6bn ($65.51bn) as of September 2012, up from QR193.9bn ($53.2bn) in 2011 with a growth rate of 41.9%. Its deposit base reached QR268.5bn ($73.73bn), up from QR200.1bn ($54.9bn) for year-end 2011. The net profit for 2011 amounted to QR7.6bn ($2.1bn).

REGIONAL LEADER: QNB also came first among local banks in the Middle East and North Africa (MENA) region for 2011 in terms of net profit, with its nearest rival being Saudi Arabia’s National Commercial Bank (NCB). QNB’s asset base was also higher that year than NCB’s $80.3bn. Annual growth in both categories was outstanding – QNB’s net profit was up 32.5% year-on-year in 2011, while its asset base went up 35.2% over the same period. More recent figures for the nine months ending on September 30, 2012 showed a recorded net profit of QR6.2bn ($1.70bn), a 15% increase compared to the same period the previous year.

The bank also had a high capital adequacy ratio in December 2011 – in common with most Qatari banks – at 22%, well above the Basel II requirement of 8% and the Qatar Central Bank (QCB) requirement of 10%. QNB kept up its high ratio into September 2012, saying the bank is “keen to maintain a strong capitalisation in order to support future strategic plans”.

QNB has also done well in regional and international rankings published by industry publication The Banker.

For example, the magazine has estimated QNB’s brand value at $1.26bn, placing it first among Middle Eastern banks and 114 among 500 banks worldwide. The bank has also achieved significant overseas expansion in recent times. “One of our strategic goals is to become a MENA icon,” Mohamad Moabi, QNB’s assistant general manager of economics, financial analysis and research group strategy, told OBG.

Since its creation as the first Qatari-owned bank in 1964, QNB has established a presence in over 24 countries, including the UK and France. QNB also has an asset management arm – the largest in Qatar – along with financial advisory and brokerage and custody outfits in QNB Capital and QNB Financial Services.

Behind its success, QNB has some strong fundamentals – in particular the fact that it is 50% owned by the Qatar Investment Authority (QIA). The rest of its shares are held by the private sector, and the bank is listed on the Qatar Exchange (QE). The QIA’s role gives QNB implicit government support, and it is well placed to undertake state business. In 2011 the bank reported that 24.4% of deposits came from the government sector and 30.9% from state agencies. This solid foundation is reflected in the A+ credit ratings from Fitch and Standard & Poor’s, and Aa3 from Moody’s.

SUPPORTING CAST: Commercial Bank of Qatar (CBQ) is the second largest in terms of assets. Established in 1975, CBQ was Qatar’s first private commercial bank. According to CBQ’s financial results for the half-year ending on June 30, 2012, the bank delivered a strong first half-year net profit of QR1.01bn ($277m), a 6% increase over the same period in 2011. The net profit for the second quarter of 2012 saw a 16% rise, at QR546m ($149.9m), over the first quarter. Net profit for CBQ in 2011 was QR1.88bn ($516m).

It had assets of QR71.54bn ($19.7bn) in 2011, alongside loans of QR41.6bn ($11.4bn) and deposits of QR38bn ($10.4bn). Asset growth, in comparison to 2010, was 14.4%, while net profit was up by around 15% year-on-year. The last quarter of 2011 outperformed this, however, with profit up 22% compared to same time period in 2010. Meanwhile, according to the bank’s figures, loans and advances rose by 24% between the end of 2010 and the end of 2011, and deposits by 14.1%, while the non-performing loan ratio fell from 3.16% to 1.2%.

In August 2011 the bank received approval for a $5bn Euro Medium Term Note (EMTN) programme from the UK Listing Authority. CBQ repaid $500m from an earlier EMTN programme in October of 2011, and in February 2012 signed a $455m loan with seven regional and international banks, earmarked for general corporate purposes. In April 2012 the bank issued $500m in five-year unsecured fixed-rate notes in the international debt markets under the EMTN programme.

Overseas, CBQ holds a 35% stake in National Bank of Oman and a 40% stake in the UAE-based United Arab Bank. The lender is listed on the QE, but the state holds about 16.7% of shares following the post-downturn capital support plan (see overview). The bank’s credit ratings for long-term deposits mid-2011 were A1 from Moody’s, A- from Standard & Poor’s and A from Fitch, all with stable outlooks.

The third- and fourth-largest banks in 2011 in terms of assets were two Islamic institutions: Qatar Islamic Bank, with QR58.26bn ($15.99bn), and Masraf Al Rayan, with QR55.27 ($15.2bn).

The next-largest conventional bank after CBQ was Doha Bank (DB). For 2011 it booked assets of QR51.42bn ($14.39bn), along with loans and advances of QR30.7bn ($8.4bn) and deposits of QR31.66bn ($8.6bn). Net profit was QR1.24bn ($340m), up about 17.7% over 2010. The bank’s 2011 financial statement showed total assets up 10.9% on 2010, while customer deposits rose by 7.4% and loans by 15.6%. The bank reported for the second quarter of 2012 total assets of $14.24bn, $8.33bn for its deposits portfolio and $8.14bn for its loan portfolio. The bank is implementing a three-year development plan that entails expanding its overseas network. This currently consists of branches in Dubai and Kuwait and representative offices in the UK, Turkey, China, Japan, Singapore, South Korea and Abu Dhabi. It is also in the process of obtaining a representative office licence in New York. DB has approval to move into the retail insurance business, and by early 2012 had begun a roadshow for a $500m bond issue, while it also has a $2bn EMTN programme. The bank had a capital ratio of 13.2% in 2011, and its credit ratings for short-term foreign currency were P1 from Moody’s, A2 from Standard & Poor’s and F1 from Fitch in late 2011.

In terms of asset size, figures for 2011 place International Bank Qatar (IBQ) next in line among the conventional banks. IBQ is 30% owned by National Bank of Kuwait, with the rest of its shares privately held, and is not listed on the QE. In 2010 it recorded total assets of QR27.18bn ($7.46bn).

ON THE UP: According to the IBQ’s annual report for 2011, the bank saw a 25% year-on-year rise in net profits in 2011 to QR573m ($157m), while its customer loan portfolio grew 9% to QR16.7bn ($4.6bn). Customer deposits, meanwhile, rose 22% to QR19.4bn ($5.3bn). These were some of the strongest growth figures in the sector, and in 2011 Arabian Business gave it the “Best Retail Bank in Qatar” award. The year 2011 also saw IBQ sell its Islamic retail banking portfolio, known as Al Yusr, to local Islamic finance outfit Barwa Bank.

Al Khaliji, meanwhile, which is listed on the QE, booked total assets in 2011 of QR27bn ($7.4bn), up from QR18.7bn ($5.1bn) in 2010 – a 44% rise. Loans and advances increased by 55% from QR7.26bn ($2bn) to QR11.3bn ($3.1bn) over the same period. Customer deposits went from QR7.83bn ($2.15bn) to QR12.13bn ($3.33bn), an increase of 55%. Net profit after tax was up 14%, to QR487m ($134m).

The sixth conventional local bank is Ahli Bank, which is part of the Ahli United Bank Group, an outfit present throughout the Gulf and in the UK. Its financial statements for 2011 show total assets shrank slightly year-on-year, down from QR17.96bn ($4.93bn) to QR17.73bn ($4.87bn). Loans and advances rose, however, from QR11.34bn ($3.11bn) to QR12.15bn ($3.34bn), an increase of 7%. Net profit for the year also went up by 7.2%, from QR412m ($113m) to QR442m ($121m).

A CAPITAL IDEA: In early 2012 the bank announced plans to increase its capital, issuing over 42m new shares to shareholders, raising the total to around 112m shares. Some 20% of this total is then to be placed on the market. In terms of ratings, Fitch and Capital Intelligence both maintained long-term credit at A- with a stable outlook in early 2012.

Finally, Qatar Development Bank (QDB) is the state’s sole development financial intermediary. This had assets of QR3.65bn ($1bn) in December 2011, according to its financial statements, down from QR4bn ($1.1bn) a year earlier, while its profits were also reduced, from QR74m ($20.3m) to QR50.8m ($13.9m), over the same period.

In 2012 QDB’s Al Dhameen programme will see specialised teams working with individual banks to offer small and medium-sized enterprises preferential financing. This is part of the government’s long-term strategy for diversifying business, and is likely to be of major benefit to the sector as a whole in years to come.