DOHA: The combined net profit of 42 companies listed on Qatar Exchange (QE) increased by 8.8 percent to QR32.7bn for the first nine months of 2014, compared to a year ago. Barring one company, whose financial year starts on April 1, the entire listed companies announced their third quarter results.
There has been a positive story for listed banks in Qatar for the first 9 months of 2014, with robust asset growth; lower impairment charges; stronger asset quality; higher profitability; all coupled with capital adequacy ratios that remain above the QCB minimum requirements, KPMG Qatar noted in its analysis.
Speaking of the positive news, Omar Mahmood, Partner in KPMG Qatar and Head of Financial Services for the firm, said: “Combined net profitability for all banks increased by 12.2 percent from the nine month period ended September 30, 2013, predominantly driven by higher net interest income. Strong economic growth and increased market activity have been the main drivers behind these positive set of results.”
For the first time in recent periods, market sentiment appears to be more correlated with entity specific fundamentals with bank share prices, for all but one bank, exhibiting a positive trend from the prior period.” Islamic bank share prices have on average increased by 69 percent whereas conventional bank share prices on the other hand, have on average increased by 12 percent, Mahmood said.
The collective asset base of all banks has increased by 9 percent, up by QR78.1bn from December 31, 2013, which is primarily due to the increase in lending portfolios by QR59.1bn or 10.5 percent. This is predominantly, a result of increased public spending on the back of a gradual acceleration of infrastructure projects. Furthermore, Islamic banks continue to experience higher asset growth rates than their conventional counterparts.
Deposits are up, with a healthy growth of 7.7 percent, up by QR46.4bn from December 31, 2013. Mahmood said “the increase is mainly a result of population growth, increased marketing and attractive pricing to absorb liquidity in the market. This will certainly be an area of continued focus for banks in Qatar given the recently issued Qatar Central Bank regulations on the ‘loan to deposit’ ratio which will force banks to actively look to increase their customer deposit base, and if not, be faced with restricting lending activities.”
Despite concerns over recent oil price declines and increasing regulatory driven capital requirements, mainly for ‘domestic systemically important banks’, the overall banking sector outlook remains positive. Bank lending and investment activity, both domestic and international, are expected to rise on the back of further acceleration of infrastructure projects ahead of the 2022 FIFA World Cup and increased public spending underpinned by high fiscal surpluses.
The Peninsula
