By Satish Kanady
DOHA: Increased price competition, tighter regulations and delayed infrastructure projects have all contributed to the slower growth that Qatar’s listed banks have experienced in 2012. Nevertheless, the combined effect of a mediocre increase in net interest income from financing activities and investment income did still result in all but one of the banks reporting a growth in net profit as compared the prior year, a top financial analyst has said.
Listed banks in Qatar have delivered a steady set of results for the year 2012, despite growth not being at the levels many had predicted. Though the combined net profitability has increased by 7.1 percent from the previous year, it is lower than the growth witnessed in previous years, and not at the levels expected by many analysts, Omar Mahmood, (pictured) Partner, KPMG Qatar, told The Peninsula yesterday.
Many of Qatar’s flagship projects, which were expected to take off in full blast during 2011-2012, didn’t happen. In fact, the much pronounced $100bn hasn’t really trickled down to the local economy in 2012. There were large expectations in the equity market, which were also less than expected, Omar noted.
Citing KPMG’s snapshot results for Qatar’s listed banks in 2012, shared exclusively to The Peninsula, Omar said the collective total asset base of all banks has increased by 18 percent in 2012, up by QR111.4bn, though once again lower than the growth in the prior year The total assets were up by QR133bn.
The listed banks have also managed to grow their deposits by 30 percent mainly through increased marketing and attractive pricing to absorb excess liquidity in the market, and to further shore up their balance sheets in advance of future expected infrastructure boom.
“The snapshot shows the banks have done broadly well, though not as well as expected. But the banking sector expects a sturdy performance by 2014-2015. The year 2015 is expected to see a lot of positive impacts with the government spending will really start kick-in”, he said.
The listed banks impairment charges have increased by 5 percent compared to last year, the increase mainly came from impairment on investments. Islamic bank share prices have on average declined by 8.57 percent. The conventional banks share prices have even declined by 18.74 percent.
The overall average market ROA (return on assets) and ROE (return on equity)have both declined as compared to the corresponding year mainly due to asset growth and higher equity balance, which have both outpaced the growth profitability.
“When you compare these results with the region or with the rest of the world it is a very good results. But when you look at it historically, it may not be as good. However, 2013 will be important for the banking sector“
Lots of banks will be realigning their strategies this year. Some of the banks will be winding down their retail windows. The focus will be on corporate investment banking, hopefully taking benefits of the infrastructure projects.
Debt markets are also likely to be deepened further and lot of products are to be launched. Qatar Exchange will also see new entrants coming to the market in 2013.
The Peninsula
