Ahli Bank looking to strengthen retail business with Qatar focus

 By Pratap John/Chief Business Reporter

Ahli Bank looks to grow in size and improve its nationwide retail franchise as the lender currently focuses on the Qatar market, said CEO Salah Murad.

“Currently, retail franchise is 20% of Ahli Bank’s balance sheet … we want to make it 30%,” Murad said yesterday.

Ahli Bank’s current focus is on Qatar, he said. “We have no plans to go beyond Qatar in the short term. We want to build a stronger infrastructure, before we can look outside,” Murad said.

Although the CEO said Ahli Bank wanted to grow its capital, he did not elaborate on the exact plans.

“We have to look at medium-term funding probably next year because Ahli Bank has to address the Basel III requirements. Certainly, we are not looking at a merger (not going this route for achieving greater size) … probably we are looking at capital increase, but we don’t know exactly when,” he said.

While capping retail interest rates might affect net margin, Murad said it was done in Qatar with a good intention – for consumer protection.

He said the default rate in Qatar “was not that high”.

“The market has flattened. All the retail loans now are actually good. There are very few defaults under new loans in the local banks. Retail loans are still a profitable business,” Murad said.

Ahli Bank’s real estate exposure was well within the limits that have been set.

Murad said Ahli Bank has organised its business banking departments with a focused approach.

Affirming Ahli Bank’s long-term credit rating, Fitch rated the Bank at A- with a stable outlook.

“The affirmation reflects the bank’s growing local franchise value, asset quality and capital adequacy,” Murad said.

Ahli Bank has posted a first-half net profit of QR271mn, up 12.3% on the same period last year, driven mainly by higher core banking income.

The bank’s total assets stood QR24.7bn in H1, 2013 compared with QR17.7bn in the same period last year, an increase of 39%. Loans and advances grew by 32.6% to QR15.8bn in H1 compared with QR11.9bn in the same period last year.

Customer deposits increased by 46.4% to QR17.5bn in June this year compared with QR11.9bn in the same period last year. Net interest income and fees and commission income grew by 27.1% and 8.5%, respectively in June this year.

The cost to income ratio was 29.3% in H1, 2013 compared with 31.4% in the same period last year, despite increase in costs.

Ahli Bank has achieved a return on average equity (ROAE) and strong return on average assets (ROAA), at 16.8% and 2.32%, respectively, despite increased equity following the issue of rights shares in end-2012.

Various strategic initiatives of the bank were implemented following the acquisition of a 29.4% stake by Qatar Foundation. The Qatar Investment Authority has a 17.65% stake in lender.

Listed on the Qatar Exchange with a market capitalisation of about QR7.2bn, Ahli Bank now has 17 branches and 48 ATMs spread across the country.