Business model transformation shaping the landscape
2018 has been a positive year for listed banks in Qatar, with an average 9.5 percent growth in net profit and 3.2 percent growth in total assets, which demonstrates strength and opportunities in the sector.
It is expected that from early 2020, Qatar will introduce value-added tax (VAT) at a standard rate of 5% in line with the Gulf Cooperation Council VAT Framework (GCC Framework). All businesses in Qatar will be affected by the introduction of VAT, however the implications are likely to be more complex for the Financial Services sector due to categorization of exempt supplies for VAT purposes. Whilst exempt services have no direct impact on end-consumers, as they will not be charged with VAT, they can have a substantial impact on the profitability of the banks.
In December 2017, the Basel Committee on Banking Supervision (BCBS) published a revised set of minimum standards for the capital treatment of credit risk, operational risk and credit valuation adjustment risk and for a new output floor to limit the extent to which banks will be able to use internal models for credit and market risk to drive down capital requirements. Qatar is committed to adopting revised Basel IV guidelines and the QCB has already initiated consultative guidelines on the subject. Qatar has already adopted and implemented the Basel III framework ahead of some of its GCC peers.
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