QNB turns to Asia to offset Saudi-led blockade

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13 Jul 2017 – 14:36

QNB turns to Asia to offset Saudi-led blockade

By Mohammed Aly Sergie and Yousef Gamal El/Din / Bloomberg

Qatar National Bank’s (QNB) expansion into Asia is helping the lender offset the impact of the ongoing Saudi-led blockade to isolate the gas-rich Guilf state, its chief executive officer said.

The Middle East’s biggest bank by assets aims to cut the income generated from its domestic market to 50 percent by 2020 from about 67 percent currently, Ali al-Kuwari said in a Bloomberg TV interview, his first since the standoff began on June 5. The bank will apply to open a branch in Hong Kong this year and convert its China representative office to a branch that can receive deposits, he said.

“We are going to be pushing more in Southeast Asia,” al-Kuwari said at the bank’s headquarters in Doha on Wednesday. “We do business in 31 countries and our diversification is really working and helping to overcome any crisis.” The bank also plans to open new branches in Oman, Kuwait and India, he said.

Qatari lenders are coming under pressure after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations and closed transport routes last month, accusing the nation of funding Islamist terrorism, a charge it denies. Some banks in these countries are said to have cut their exposure to Qatar amid concern of a widening of the blockade, while Qatari lenders are boosting interest rates on dollar deposits to shore up liquidity.

‘Little’ Impact

The impact from the one-month blockade with its neighbors “is very little,” said al-Kuwari, who has led the bank since July 2013. Gulf countries “represent less than 5 percent of the balance sheet. Even if the situation continues forever, to diversify 5 percent is so easy and doesn’t really take so much,” he said.

QNB on Tuesday reported a 2 percent increase second-quarter profit to QR 3.45 billion ($929 million) as provisions and expenses dropped. EFG-Hermes Holdings SAE had estimated a profit of QR 3.21 billion , while NBAD Securities predicted QR3.47 billion.

The bank is maintaining its annual profit guidance at 6 percent to 8 percent and expects its diversified revenue and funding sources to mitigate the regional standoff, al-Kuwari said.

“We didn’t see any abnormal increase in the cost of funding,” he said. “QNB is a highly-rated institution, it’s an AA institution. Investors love the QNB story, love the Qatar story.”

Assets Doubled

QNB has more than doubled its assets to $211 billion over the past five years, according to data compiled by Bloomberg. It’s also spent about $6 billion on acquisitions in countries including Egypt and Turkey. It bought Societe Generale SA’s Egypt unit and a 20 percent stake in Togo-based pan-African lender Ecobank Transnational Inc. It also bought Turkey’s Finansbank AS for $3 billion in 2015.

QNB shares closed up 2.1 percent on Wednesday. The stock has dropped 9.7 percent since the embargo on Qatar began, dragging the country’s main stock gauge down 6.5 percent over the same period. QNB is the index’s biggest member with a weighting of about 17 percent.

 

Source  :  The Peninsula

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