Strong performance by Qatari banks in Q3

Qatari banks displayed strong growth in the third quarter, showing resilience to the global financial crisis, said a study sent to Emirates Business.

The combined profits of listed banks in Qatar increased by 34.3 per cent in the nine-month period ended September, from QR6 billion (Dh6bn) to QR8.1bn.

The banking sector in Qatar would be one of the major beneficiaries of economic boom in the region and coupled with confidence-building measure by the Qatar Central Bank, the sector is poised for a positive growth in medium term, said the study by Kuwait-based investment bank, Global Investment House.

Banking sector in the region has shown a robust performance. Omani banks too recorded robust growth in income in the third quarter, staying unaffected by turbulences in global markets.

The combined profits of listed Omani banks showed a 37.6-per cent growth during the nine-month period this year, from RO125.5million (Dh1,197m) to RO172.7m, in comparison to the corresponding period the previous year.

According to the study, due to a limited exposure to global financial markets, banks in Qatar managed to escape implications of the global crisis.

Positive market developments in the country have helped boost investor confidence, said Global. On October 29, Qatar's Central Bank Governor Sheikh Abdullah Mohammed Al Thani said no intervention in the country's financial sector was needed and the banks were highly capitalised and liquid. The central bank has a lot of instruments in the open market that can be used in case the need rose, indicated the governor. Qatar's Prime Minister, Sheikh Hamad bin Jassem bin Jabr Al Thani, also indicated the government had no intention to halt infrastructure projects or reduce overseas investments. Further, the Qatar Investment Authority has agreed to contribute 10 per cent to 20 per cent to the capital of local banks to boost their capacity to finance development projects, said researchers at Global, while citing the positive developments.

"Multi-billion dollar projects are in the pipeline or on drawing board at various stages from various sectors apart from the hydrocarbon sector. The banking sector would be one of the major beneficiaries of these projects and of regional diversification programme."

Qatar National Bank and Qatar Islamic Bank, market heavyweights in terms of market capitalisation, saw a 62 per cent and a 45.7 per cent rise in their net profit for the nine-month period. Qatar National Bank also recorded the highest year-on-year growth of 62 per cent and was followed by Commercial Bank of Qatar a 54.8-per cent year-on-year rise for the third quarter. Qatar Islamic Bank claimed third position in terms of profit growth for this period.

Al Khalij Commercial Bank saw a decline of 62 per cent on nine-month performance basis and the decline in its profits was attributed to a 359-per cent jump in personnel expenses. The bank's net interest income grew by 52.1 per cent, said the study.
Global said the country and the region have a huge investment potential.

The researchers said banks in the country have focused on improving the quality of their assets in the last few years, which has resulted in an improvement in their loan portfolio.

"We believe going forward, quality of the loan book are to remain sound. However, steep growth in the loan book need to be watched with caution," Global said.