QNB has topped Bloomberg Markets’ third annual ranking of the “world’s strongest banks” based on the Doha lender’s 2012 performance.
The strongest-bank ranking includes lenders with at least $100bn in assets— something QNB achieved for the first time in 2012 with a series of acquisitions in the Mideast and North Africa that gives it a foothold in some 25 countries.
The ranking weighs and combines five criteria, including Tier 1 capital compared with risk-weighted assets; nonperforming assets against total assets; and efficiency, a measure of costs against revenues.
Tier 1 capital consists of a bank’s cash reserves, outstanding common stock and some classes of preferred stock, all of which combine to act as a shock absorber against losses when the economy hits a rough patch.
QNB joins a ranking whose top tier is dominated for a third year by Asian and Canadian lenders.
“Government supervision of Qatar’s QNB comes with the territory,” Bloomberg Markets said in a report.
The bank is 50% owned by the QIA, the $100bn fund that absorbs much of the country’s oil and gas revenues. Bigger than all other publicly listed domestic lenders combined, QNB provided 66% of loans to the government and government-owned entities last year, while state agencies accounted for more than half of deposits, according to data provided by the bank.
“The bank is essentially an extension of the state,” said Akber Khan, director of asset management at Al Rayan Investment in Doha.
“Any concerns about future capital adequacy or balance sheet strength are entirely redundant.”
Government ties don’t explain all of QNB’s strength, Bloomberg Markets quoted bank CEO Ali Shareef al-Emadi as having said.
“We are very close to the government and government agencies, but we get deals on a very much commercial basis. We lose deals; we get deals,” he said.
While the bank benefited from the government’s purchase of its real estate investments after the 2008 financial crisis, it didn’t receive a government capital increase as did other local lenders.
QNB’s profits have risen by an average of 27% a year during the past five years.
QNB has become a global financial force - driven to do business outside the country in part by the small size of its home market.
Qatar’s population is around 1.8mn, and just 20% of its residents are native Qataris. As economic turmoil gripped the world, other banks shrunk into their home territories, al-Emadi said.
“We’ve done completely the other way around,” he said.
The bank purchased stakes in Libyan, Moroccan and Iraqi lenders during 2012. In March, it bought the Egyptian branch of France’s Societe Generale for $2.45bn.
In April 2012, it sought to acquire Turkey’s Denizbank, it lost out to Moscow-based OAO Sberbank.
In 2011, it opened offices in Jakarta, the home market of PT Indosat. The Indonesian telecom company is controlled by QNB customer, Ooredoo.
“QNB’s profits have doubled in the last three years,” Al Rayan Investment’s Khan said. “For very rapid growth to continue, growth outside Qatar will be necessary,” he said.