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Sunday, 12 August 2007

Qatar Islamic Bank plans to launch real estate funds

DOHA: Qatar Islamic Bank (QIB) is planning to launch real estate funds in this quarter to primarily invest in the London and Asian markets as part of its strategy to keep its bottom line growth at 25% for the fiscal.The bank – whose Malaysian venture Asian Finance Bank (AFB) is more of an “arrangement bank” – is looking to fund projects to the tune of $200-300mn, while establishing a bank in Sudan with an authorised capital of $1bn by next year, according to QIB CEO Salah al-Jaidah.“Real estate products are to be launched in the third quarter which will further (strengthen) our profitability,” al-Jaidah said.Elaborating on QIB’s proposed real estate fund, he said it depended on the projects and the normal equity participation would be of the size of $150mn, implying that there was further leverage to invest up to $500-600mn.“We are looking at London and other real estate markets within Asia,” he said without disclosing the destinations in the Asian market.QIB’s investments come at a time when equity markets worldwide have been rattled by subprime mortgage financing, which led to many global peers suspending investment funds that have exposure to the US market. BNP Paribas, for example, has suspended three such funds.QIB’s investment portfolio, deployed on behalf of customers, amounted to QR492.65mn – comprising Bader Fund 3 of QR14.16mn, Solidarity Fund of QR4.81mn and Al Rayyan Fund 2 of QR326.66mn – and it has also parked QR83.31mn in Deutsche Telekom, QR49.01mn in Livene Bauwens and QR14.7mn in Sukuk Siemens as of June 30 this year, according to its financial statement.Much of the growth will come from the “exceptional items” and core business to “achieve the target of 25% growth year-on-year in the profitability,” al-Jaidah said, adding that exceptional items included sale of investments, assets and real estate properties.He was speaking on the sidelines of analysts meet to discuss the first half results that saw 6% jump in its net profit to QR501.59mn despite shrinkage in net fee income and loss on foreign exchange earnings (as reported by Gulf Times on July 19).On the fee income, which reported 71% decline to QR37.36mn in the first six months of this year, he said it was due to QINVEST, a new entity in the Qatar Financial Centre that could not garner in the review period.About foreign exchange loss of QR12.12mn (against QR5.26mn gains in January-June 2006), al-Jaidah said it was only an accounting loss and therefore ‘notional’; it could translate into capital gains.On AFB, which started operations in January to cater to Malaysia as well as its neighbouring countries as Singapore, Indonesia and Brunei, he said it was a $100mn capital bank and hence can fund 4-5 times its equity size. QIB has 20% stake in AFB.“We are looking towards above $200-300mn per transactions,” he said, adding the AFB would be more of an ‘arrangement bank’ and QIB was trying to share risks with other Qatari and non-Qatari investors.QIB, which is planning to open its European Finance House by this year, is contemplating such entities across the world as part of efforts to strengthen its global operations. He said QIB was entering Sudan, in association with other investors in establishing a bank with an authorised capital of $1bn.“It will be a full-fledged bank,” al-Jaidah said, adding the setting up was expected to be completed by next year depending on the approval from the regulatory authorities.QIB’s presence in global markets includes the Arab Finance House in Lebanon; Gulf Finance House in Bahrain, Tadamon Islamic Bank in Yemen and Solidarity Family Islamic Insurance in Bahrain. - (GT, 12 Aug 07)

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