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Tribune News network
Doha
KPMG recently released its fourth edition of the ‘GCC listed banks’ results’ report, which analyses the published results of listed commercial banks across the region for the year ended December 31, 2018.
The report, titled ‘Embracing Digital’, has shown that Qatar’s banking sector saw positive results in 2018, with an average 9.5 percent growth in net profit, and 3.2 percent growth in total assets.
Omar Mahmood, Head of Financial Services for KPMG in the Middle East and South Asia, and partner at KPMG in Qatar, said, “Overall it has been a positive year for listed banks in Qatar. While profitability and assets have, on average, increased from the previous year, banks in Qatar have also managed to reduce costs by 1.3 percent on average, resulting in a sector cost-to-income ratio of less than 28.2 percent.
“With the lowest cost-to-income ratio in the region, these impressive results reflect the continued focus by the sector, and the country as a whole, on efficiencies to improve net profits.”
Mahmood further said, “Another leading focus for banks over the next year will be credit quality, which remains a challenge, as loan impairment and non-performing loan (NPL) ratios increased from the prior year. Although NPL ratios remain relatively low when compared to international norms, 2018 saw higher ratios in comparison to the previous year.”
As predicted last year, the regulatory agenda continues to evolve on local, regional and international levels, driven by global developments.
Mahmood said, “New accounting standards, Basel III requirements and an increasing focus on Anti Money Laundering (AML) and Know Your Customer (KYC) will not only keep regulators busy in the year ahead, but will also drive banks to reshape their strategies to better prepare for, and effectively manage, tighter regulations, particularly in the new fast-paced digital era.”
Looking to the future of the financial services sector in light of the rapid technological advances, Mahmood said, “In order for banks to differentiate themselves in a competitive market and remain relevant, they need to continue to innovate their practices and digitise their processes. Whether that be through their go-to-market channels, or through the use of innovative technology in the back and front office, we expect an increased investment in this space.
Regarding Qatar’s efforts to embrace the digital agenda, he said, “Financial institutions and regulators are showing greater support for the fintech sector, through various recent and upcoming initiatives, such as the launch of a local innovation hub and the expected opening of the first digital branch of an international bank in Qatar.
“The emergence of fintech is only the latest wave of innovation to have hit the banking industry yet it has the potential to lower barriers of entry to the financial services market and elevate the role of data as a key commodity and drive the emergence of new business models.”
Additional insights in the report find that all countries across the region have experienced mergers or talks to merge in 2018.
Regarding mergers in Qatar, Mahmood said, “In early 2019, the merger of two unlisted banks was completed which is expected to trigger further consolidation initiatives across the banking sector in our view. The merger of banks is expected to combine market share and improve pricing and cost synergies, which may make them more competitive in the context of shrinking margins currently being faced by banks in Qatar.”
Qatar National Bank (QNB) remains the largest bank in the region, by assets and profitability, with a market share of 58 percent of total listed Qatar banking assets, showcasing their dominant position in the sector across the region.
In comparison to 2018, there has not been a significant impact on capital adequacy ratios in Qatar as a result of the adoption of the IFRS 9, which introduced new requirements for classifying and measuring financial assets and liabilities.
Doha
KPMG recently released its fourth edition of the ‘GCC listed banks’ results’ report, which analyses the published results of listed commercial banks across the region for the year ended December 31, 2018.
The report, titled ‘Embracing Digital’, has shown that Qatar’s banking sector saw positive results in 2018, with an average 9.5 percent growth in net profit, and 3.2 percent growth in total assets.
Omar Mahmood, Head of Financial Services for KPMG in the Middle East and South Asia, and partner at KPMG in Qatar, said, “Overall it has been a positive year for listed banks in Qatar. While profitability and assets have, on average, increased from the previous year, banks in Qatar have also managed to reduce costs by 1.3 percent on average, resulting in a sector cost-to-income ratio of less than 28.2 percent.
“With the lowest cost-to-income ratio in the region, these impressive results reflect the continued focus by the sector, and the country as a whole, on efficiencies to improve net profits.”
Mahmood further said, “Another leading focus for banks over the next year will be credit quality, which remains a challenge, as loan impairment and non-performing loan (NPL) ratios increased from the prior year. Although NPL ratios remain relatively low when compared to international norms, 2018 saw higher ratios in comparison to the previous year.”
As predicted last year, the regulatory agenda continues to evolve on local, regional and international levels, driven by global developments.
Mahmood said, “New accounting standards, Basel III requirements and an increasing focus on Anti Money Laundering (AML) and Know Your Customer (KYC) will not only keep regulators busy in the year ahead, but will also drive banks to reshape their strategies to better prepare for, and effectively manage, tighter regulations, particularly in the new fast-paced digital era.”
Looking to the future of the financial services sector in light of the rapid technological advances, Mahmood said, “In order for banks to differentiate themselves in a competitive market and remain relevant, they need to continue to innovate their practices and digitise their processes. Whether that be through their go-to-market channels, or through the use of innovative technology in the back and front office, we expect an increased investment in this space.
Regarding Qatar’s efforts to embrace the digital agenda, he said, “Financial institutions and regulators are showing greater support for the fintech sector, through various recent and upcoming initiatives, such as the launch of a local innovation hub and the expected opening of the first digital branch of an international bank in Qatar.
“The emergence of fintech is only the latest wave of innovation to have hit the banking industry yet it has the potential to lower barriers of entry to the financial services market and elevate the role of data as a key commodity and drive the emergence of new business models.”
Additional insights in the report find that all countries across the region have experienced mergers or talks to merge in 2018.
Regarding mergers in Qatar, Mahmood said, “In early 2019, the merger of two unlisted banks was completed which is expected to trigger further consolidation initiatives across the banking sector in our view. The merger of banks is expected to combine market share and improve pricing and cost synergies, which may make them more competitive in the context of shrinking margins currently being faced by banks in Qatar.”
Qatar National Bank (QNB) remains the largest bank in the region, by assets and profitability, with a market share of 58 percent of total listed Qatar banking assets, showcasing their dominant position in the sector across the region.
In comparison to 2018, there has not been a significant impact on capital adequacy ratios in Qatar as a result of the adoption of the IFRS 9, which introduced new requirements for classifying and measuring financial assets and liabilities.
