What have been QNB's main areas of focus in the last few years at the national and international level, and what are its plans and expectations for 2020?
While our aspiration is to become a leading bank in the Middle East, Africa, and South East Asia by 2020, our main focus is to pursue sustainable, profitable growth. Our aspiration and focus are underpinned by a long-term strategy that encompasses protecting our dominant position in Qatar and accelerating international growth organically and inorganically. Domestically, we continue to focus on maintaining our leading position by maintaining our market share and profitability in the public sector as well as our profitability from the private sector and individuals. We focus on four primary areas: utilities, transport, 2022 FIFA World Cup infrastructure, and real estate. In addition to these, we are supporting a number of private-sector initiatives to make Qatar more self-sufficient in food production, logistics, and manufacturing to ensure its long-term economic sustainability. Furthermore, international organic expansion was and is one of the cornerstones of QNB Group's strategy. Through expansion, QNB aims to diversify its earnings and risk. Our growing international footprint is largely in frontier and emerging markets. As we expand, so too do the opportunities across our network. QNB Group is present in 31 countries across Asia, Africa, and Europe, and it has continued to strengthen its contribution from previous acquisitions in Egypt and Turkey. In both these markets, we see further growth potential and a pickup in economic growth. In Asia, we have a branch in Singapore, which serves as our Asia hub, and a subsidiary in Indonesia, the largest economy in ASEAN. We are specifically targeting ASEAN countries, which are export-oriented economies that have exceeded global economic growth in the last two decades and are expected to continue to do so. Besides organic growth, we also continue to consider strategic investments in markets that enable us to expand our geographic footprint. We are very selective in our approach with regards to further expansion and look at targets in relevant markets with regards to macroeconomic outlook, banking sector penetration, growth potential and regulatory requirements, risk/reward, target quality, strategic fit, and price.
Moody's Investors Service upgraded the outlook for Qatar's banking system from negative to stable in October 2018. How has the banking sector evolved in the last few years, and why did Moody's upgrade Qatar's rating?
The upgrading of the banking sector outlook to stable reflected the resilience of the Qatar's economy and banking system. The rating agency also stated that country's banking sector profitability will remain stable with capital buffers remaining strong. This upgrade stems from the successful rebalancing of Qatari banks' funding profile. Moreover, the sector has continued to demonstrate sustainable and healthy growth, substantiated by high asset quality, strong capitalization, and high profitability. Nonperforming loans were low, at 1.9% of total loans in 2018, and returns to equity were high, at 15.3%. Banks comply fully with Basel III capital adequacy standards with a capital adequacy ratio of 18% as of the end of 2018. Strong supervision by the central bank and prudent lending policies will ensure that the strong health of the Qatari banking sector will continue in the future.
How has the QNB rallied around the government's policies to make sure the objectives dictated in the QNV 2030 are accomplished and the economy is diversified?
The strategic initiatives around QNV 2030 are focused on human, social, economic, and environmental development. The achievement of the QNV 2030 goals requires strong coordination among major institutions in Qatar, both public and private. As a financial intermediary, we view ourselves as a natural catalyst to nurture the growth of the private sector, specifically SMEs. QNB Group has continued to build on the successful launch of its SME unit as a one-stop shop. What's more, we have broadened our value proposition for SMEs to enable a seamless service to support them throughout all lifecycle stages.