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Tuesday, 19 May 2015

Qatar Islamic Bank to boost capital via bond sales

Qatar’s biggest Islamic bank plans to sell bonds to help boost core capital to comply with Basel III banking standards.

Qatar Islamic Bank (QIB) expects to issue a Tier 1 capital-boosting bond between this quarter and the third quarter, the bank’s chief financial officer said yesterday. The Doha-listed lender in February received shareholder approval to issue up to 5 billion Qatari riyals (Dh5.04bn) to increase its Tier 1 or core capital in line with Basel III banking standards.
The bond will have a perpetual tenor.
“We have taken approval for 5bn Qatari riyals worth of issuance but at this point when we look at our organic growth requirements and we need up to 2bn riyals only and for the other 3bn riyals we have taken approval from our shareholders in case there are growth opportunities we could tap into and not have to go through the entire approval process,” Gourang Hemani said on the sidelines of a conference in Dubai.
“It is going to be a private placement, most likely within Qatar. We are looking somewhere between the second quarter and third quarter.”
Banks in the Arabian Gulf are issuing capital-boosting bonds as part of raising new funds through capital tools to foster growth and comply with the new Basel III banking rules, which will be phased out by 2019.
The IMF expects Qatar’s economy to grow 7.1 per cent this year and 6.5 per cent next year.
“We see the [credit] market growing on average of 10-12 per cent [a year] over the next two to three years,” said Mr Hemani. “I don’t see why we shouldn’t participate in the growth story.”
QIB’s net profit rose 19 per cent to 400 million riyals in the first quarter of this year, compared to a year earlier. Total income grew 13 per cent in the first quarter to 950m riyals, compared with the year-earlier period.
(The National Business / 18 May 2015)
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