Qatar’s listed banks show steady growth, seeing an average 5.5 percent increase in profit and 9.3% growth in assets in FY 2019
Recent KPMG analysis has shown that Qatar’s listed banks have enjoyed a progressive financial year 2019, reporting on average, a 5.5 percent profit increase year-on-year (YOY). This is mainly attributable to higher margins, continued cost control, and a clear focus on risk.
On the findings, Qatar-based Partner and Head of Financial Services for KPMG in the Middle East and South Asia, Omar Mahmood, said: “The stable increase in profits of banks in Qatar is a testament to their efforts to grow their balance sheets, with a clear focus on high quality assets, and lower risk yet profitable business”. Margins improved as interest/profit income was up by 6.5% compared to an increase of cost of funds of 5.9%, as the Qatar Central Bank reduced the headline deposit rates during the year by 50 bps. Furthermore, the cost to income ratio of all banks also continued to decline as the Bank’s saw a collective decrease in their staff and other administrative expenses. Qatar’s banking therefore continues to maintain one of the lowest cost-to-income ratios in the region.
The total assets of the listed Banks also continued to show grow steady growth. On this Mahmood added: “Despite the liquidity pressures, we have seen Bank’s in Qatar grow their asset base by 9.3%. The growth was driven by lending to customers and financial institutions in addition to the purchase of investment securities. The growth in assets also resulted in the slightly reduced return on assets for all but 3 listed Banks”.
The overall provisioning levels of the listed Banks for FY 2019 remained largely in line with FY 2018, on which Mahmood continued: “The Banks absorbed the impact of IFRS 9 in 2018, hence the overall provisions on lending to customers only increased by QR 244 million. The increase was mainly seen in expected credit losses for stage 2, or watchlist customers, with a reduction in non-performing loan provisions.”.
Mahmood also added: “market sentiment has also reflected fundamentals with the share prices of all listed banks, except one, showing an upward trend which was a further positive signal from the market on the resilience and strength of the banking sector in Qatar.”
The full analysis can be found in KPMG in Qatar’s 2019 ‘Listed Banks Results Snapshot’, which analyses the year-end financial statements issued by listed banks in the country.
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©2020 KPMG Qatar Branch is registered with the Ministry of Commerce and Industry, State of Qatar as a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.