Banking
From The Report: Qatar 2017
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Tightening liquidity conditions and a squeeze on profit growth proved to be the hallmarks for Qatar’s banking sector in 2016, as financial institutions across the Gulf were forced to respond to the effects of weak oil prices on the local economy. Despite tougher operating conditions, however, the sector remains resilient, with strong underlying fundamentals marked by high capital adequacy ratios and one of the world’s highest savings rates. Even though the diplomatic fallout within the GCC had ramifications for the sector in 2017, the authorities are implementing mitigation strategies. Looking ahead, Qatar’s lenders are considering overseas expansion and domestic consolidation as strategies to drive future growth.

This chapter contains an interview with Sheikh Abdulla bin Saoud Al Thani, Governor, Qatar Central Bank; Ali Ahmed Al Kuwari, CEO, Qatar National Bank; Abdul Hakeem Mostafawi, CEO, HSBC Qatar; and Sheikh Faisal bin Abdulaziz bin Jassem Al Thani, Chairman and Managing Director, Ahli Bank.

Articles from this Chapter

Overview

Notable changes: Solid policy decisions set sector on the right path
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Tightening liquidity conditions and a squeeze on profit growth proved to be the hallmarks for Qatar’s banking sector in 2016, as financial institutions across the Gulf were forced to respond to the effects of weak oil prices on the local economy. Despite tougher operating conditions, however, the sector remains resilient, with strong underlying fundamentals marked by high capital adequacy ratios and one of the world’s highest savings rates. Even though the diplomatic fallout within the…

Analysis

Digital shake up: Under new market conditions, financial technology is fast changing the sector’s landscape
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Qatar was quick to embrace the financial technology (fintech) revolution, having long recognised that digital technologies can raise both competitiveness and security. The push to digitise has been given an added boost by the blockade, as it has driven all sectors of the economy to invest in safer and more advanced fintech systems. Banks have been supportive of national fintech initiatives – such as the Smart Qatar Programme, or TASMU – and have also invested heavily in the digital transformations…

Analysis

Towards consolidation: A wave of mergers is on the cards, as the cost of borrowing rises and growth decelerates among some lenders
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With 10 domestic commercial banks and a number of financial institutions operating out of the Qatar Financial Centre (QFC), the Gulf nation is emerging as a financial services centre for the region. However, with banks’ cost of borrowing rising and the buoyant growth trend likely to approach a natural plateau in the next two to three years, there are signs that the market could be about to embark on a wave of consolidation. The potential benefits of such a trend are varied: from improved…

Interview

Expand and support: Ali Ahmed Al Kuwari, Group CEO, Qatar National Bank (QNB), on untapped markets and being a strategic partner
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Interview:Ali Ahmed Al Kuwari What is the scope for Qatari banks to further expand their footprints overseas? ALI AHMED AL KUWARI: International expansion is one of the cornerstones of the QNB Group’s strategy to achieve its vision of becoming a leading Middle East, Africa and South-east Asian (MEASEA) bank by 2020. MEASEA markets will continue to enjoy some of the fastest global growth rates. These regions require further trade and investment flows as they build the foundations for socio-economic…

Interview

Raising capital: Abdul Hakeem Mostafawi, CEO, HSBC Qatar, on debt and structural reforms
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Interview:Abdul Hakeem Mostafawi How have lower oil prices and budget cuts put pressure on deposits and credit availability? ABDUL HAKEEM MOSTAFAWI: Lower oil prices inevitably impacted market liquidity. Furthermore, activity within the market has slowed down the growth rate in the private sector and impacted retail deposits. Credit growth continues to be healthy with the government’s efforts to maintain capital expenditure. Therefore, banks are paying higher rates for customer deposits,…

Analysis

Smooth flows: Following tightening conditions in 2016, measures have been put in place to boost liquidity
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With Qatar in the midst of a bold capital investment programme – seeing almost $500m per week being spent on infrastructure developments – the financial sector has a vital role to play in maintaining the smooth flow of money to the domestic economy. In 2016 a liquidity squeeze resulted in a 4.6% drop in M2 money supply, while the sector’s loan-to-deposit ratio (LDR) reached 100.1%, in keeping with Qatar Central Bank (QCB) targets of 100%. However, in March 2017 the LDR had increased…

Interview

Attentive monitoring: Sheikh Faisal bin Abdulaziz bin Jassem Al Thani, Chairman and Managing Director, Ahli Bank, on current sector trends
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Interview:Sheikh Faisal bin Abdulaziz bin Jassem Al Thani How is the banking sector responding to low levels of domestic deposits? SHEIKH FAISAL BIN ABDULAZIZ BIN JASSEM AL THANI: The market has seen a contraction in the level of deposits available domestically, and this has led to upward pressure on interest rates. Despite this, we continuously seek to globalise our liquidity management capabilities in order to minimise our dependency on any single geographical market. From a funding…