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Friday, 28 December 2007

Qatari banks have a lot to be cheerful about


QATARI banks have a lot to cheer about this year not only from the financial numbers point of view but also their successful forays abroad picking up stakes in reputable institutions.Buoyed by the economic boom from high oil prices, the Qatar-based banks are now increasingly looking outside, mainly through acquisitions because of limited growth opportunities within their home turf.In insurance, 2007 has seen some new entrants through the Qatar Financial Centre (QFC). The national insurance firms have also consolidated their underwriting portfolios thanks to a surge in economic activities – especially in the hydrocarbon sector, aviation and real estate.Qatari banks and financial institution have registered a 35% growth in their cumulative net profits to QR3.86bn in the first half of this year. The year has also seen all Qatari banks complying with the Basel-II requirements to revise the international standards for measuring the adequacy of a bank’s capital. Basel-II was framed to promote greater consistency in the way banks and banking regulators approached risk management across national borders. They have also consolidated their local presence through many new branches, some of them fully electronic, and ATMs and kiosks across Qatar.While Qatar’s largest lender QNB has raised its stake in Jordan’s Housing Bank for Trade and Finance to 30% in September, the state’s largest private bank Commercialbank recently picked up a 34.7% stake in the UAE-based United Arab Bank.Commercialbank has completed acquisition of 246,908,462 shares in the Sharjah-based bank with which it has also signed a Management Services Agreement. QNB already owns specialised bank Ansbacher which operates from Qatar, Dubai and other places. Its joint venture bank in Syria has also started operations. QNB has a 49% stake in the Syrian bank.During the year, new branches were opened in Yemen and Oman along with representative offices in Libya and Singapore. Already QNB has full-fledged branches in Paris and London.Commercialbank picked up a 35% stake in National Bank of Oman some two years ago. Commercialbank said early this year its investment in NBO had been very profitable. NBO has had two consecutive years of record profits and two credit rating upgrades since the strategic partnership with Commercialbank.Doha Bank also increased its focus on developed and merging markets this year and got into many countries including India, China, Turkey and Singapore besides Dubai, where it is the only Qatari bank to have a full-fledged branch licence.Doha Bank is also the only Qatari bank with a full-fledged branch presence in the US (New York).This year, the bank picked up a 49% stake in Select Securities, a Kochi-based brokerage.Al Khaliji Bank set up this year. The latest entrant on Qatar’s banking landscape is in the process of building its retail presence. Besides Qatar its target markets include the UAE, Oman, Bahrain and Kuwait, from where it has shareholders. QIB, which is Qatar’s first Islamic bank, is now all set to open the European Finance House in London. Qatar’s largest Islamic lender is also currently among the world’s five largest Islamic banks.The bank recently signed up with Standard Chartered Bank and ABN Amro for a $300mn Murabaha bridge loan which it said is part of its asset and liability management strategy.QIB had also mandated the two banks to arrange for an Islamic bond (sukuk) which is meant to pay for the Murabaha loan. The sukuk will be issued next year.In 2004, QIB established the Arab Finance House in Lebanon which now has six branches in the country. In March this year, QIB inaugurated the Asian Finance Bank in Kuala Lumpur. QIB has also established real estate investment funds in the UK, the US and France. Another premier Shariah lender - International Islamic is exploring the prospects of getting into Morocco where Shariah-compliant banking still remains underdeveloped.The Qatar-based bank’s joint venture is all set to open many branches in Syria in Q1, 2008, where it has only a nominal presence now through a Damascus branch.The bank recently said its joint venture in Syria – SIIB, will expand into the country in a big way in Q1, 2008 by opening many branches across the country. International Islamic has a 30% stake in Syrian International Islamic Bank while some Qatari investors hold 19% in SIIB. The remaining 51% stake is with Syrian investors.International Islamic also played a key role in establishing Pak – Qatar Family Takaful and Pak – Qatar General Takaful companies in Pakistan.This year also witnessed another major Islamic bank Masraf Al Rayan picking up a 20% stake in SR1.2bn Kirnaf Installment Company, a consumer finance firm based in Riyadh.This, the bank said, was part of its strategy to develop in the Gulf region and beyond. Doha Bank has received authorisation from Qatar Financial Centre Regulatory Authority to do insurance business from the Qatar Financial Centre.The QR100mn firm, a 100% Doha Bank subsidiary, will be known as the Doha Bank Assurance Company.As part of its strategy to become a key international player, Qatar’s biggest underwriter Qatar Insurance Company (QIC) is establishing a holding company with subsidiaries specialising in Islamic insurance, real estate and assets management among other portfolios.The holding company will be registered in Qatar and based in Doha, QIC said recently. The establishment of the holding company formed part of a three-year QIC development strategy from 2008. Doha Insurance said earlier this year it planned to develop a dedicated Islamic insurance arm – Doha Takaful offering products that are Shariah-compliant. Doha Takaful is expected to become functional by Q4 this year.Doha Insurance had earlier ended its management agreement with the Bahrain-based Solidarity which was offering Shariah-based insurance products.The other three national insurance firms – Qatar Islamic Insurance, Qatar General Insurance and Al Khaleej Insurance – have considerably improved their profitability in 2007. --(GT, 28 Dec 07)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant/Speaker/Motivator : www.ahmad-sanusi-husain.com 
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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