Big Plans

Being the largest lender to the Qatari government, what is your strategy to support the country’s path toward the 2022 FIFA World Cup?

Qatar is witnessing a strong investment drive to diversify its economy, and hosting the FIFA World Cup in 2022 provides a key milestone toward that end. To support the country’s efforts, QNB has focused its financing on four key areas: utilities, transport, real estate, and FIFA World Cup infrastructure. In utilities, we have continued our active involvement in financing key projects such as water and sewage networks. In transport, we were involved in vessel and aircraft financing for prime shipping and transport companies. In real estate, we have seen continued demand for residential projects and hospitality, helping Qatar reach the 60,000 hotel rooms targeted for 2022. Gearing up for the 2022 FIFA World Cup, we have participated in many projects, including roads, stadiums, and infrastructure.

How do you assess the results of QNB’s acquisition of Turkey’s Finansbank, and how will this acquisition further increase trade between Turkey and Qatar?

This transaction is a significant milestone in QNB Group’s strategy of international expansion. With the addition of Turkey as a new market and one of the leading Turkish banks to its network, QNB Group further extends its international presence and will be able to increasingly benefit from the rapid development of trade and the strengthening of economic ties between Turkey and the Middle East in general, as well as between Qatar and Turkey in particular, taking into consideration the historic relations both countries enjoy. This also reflects QNB Group’s confidence in the long-term prospects of the financial sector and economy of Turkey.

As there is mismatch between the growth of lending and deposits in Qatar, do you have intentions to tap the debt and equity markets in 2017, particularly in Asia?

The slowdown in asset growth means we have greater ability to be more opportunistic when it comes to issuing further debt. We have a large and stable liquidity buffer, with our wholesale funding made up from a diverse mix of deposits, structured deposits, CDs, and EMTN issuance. We use these tools to optimally manage any asset/liability mismatches arising from local market conditions. In the debt market, we will remain opportunistic, with no fixed-issuance targets. The maintenance of strong liquidity allows us to only access the market when it is beneficial to do so. We are looking at new niche markets, such as Pro-Bond, Kangaroo, Panda-EUR, and CHF, to see if they make economic sense. As for the equity market, this really depends on the capital requirements or further plans for acquisition; as of now we are adequate on the capital requirements.

How do you assess the overall health of the banking sector in Qatar, and what factors drive bank mergers?

The Qatari banking system is healthy. It has grown strongly in size in recent years, without compromising its profitability. We expect this trend to continue going forward. We foresee robust growth in the size of the banking system, partly driven by Qatar’s strong investment spending program. And we expect this growth to be healthy, with profits also projected to grow to new highs. Underpinning this healthy growth is the strong capital position, high-asset quality, and efficient cost structure of Qatari banks.

What are your business expectations and your economic outlook for the year ahead?

Regarding credit growth, we expect a fiscal deficit around 2% of GDP in 2017, leading to continued demand for loans from the government. When it comes to liquidity, the higher oil prices should slow the withdrawal of government deposits, which declined by 11.1% year on year in December 2016. At the same time, I expect private sector deposits to grow based on high population growth. This growth was 0.9% in December 2016 compared to 9.1% a year earlier.