Sheikh Hamad, along with other board members, outlines al khaliji’s growth strategy to shareholders yesterday.
By Santhosh V Perumal/Business Reporter
Ahead of MSCI’s effective upgrade of the Qatar Exchange to ‘emerging’ market status, al khaliji, a new generation lender, has received approval from shareholders to increase the foreign ownership limit to 49% from the present 25%.
The bank is not only planning to raise funds through specific private placements but also eyes bigger contribution from its Paris-based subsidiary Al Khaliji France.
Higher foreign ownership limit “allows the bank to open up to international investors and increase the liquidity of the bank’s shares,” its chairman and managing director Sheikh Hamad bin Faisal Thani al-Thani told shareholders at the annual general assembly, which also approved the financial results of 2013 and the 10% cash dividend.
He said the bank had reviewed its foreign ownership caps to qualify for inclusion in the MSCI Index once Qatar will be upgraded to emerging market from the present frontier status.
“There is no certainty that it will help our bank. But certainly in terms of MSCI index (we don’t know whether we will be part of that index), it could demand additional liquidity on our shares,” al khaliji group CEO Robin McCall told Gulf Times.
Asked whether the bank was inclined towards more bond issues - having come out with a debut $500mn bond last year, which was oversubscribed seven times - he said “I don’t expect this year.”
But the bank may tap funds of longer duration through private placement as part of its Euro medium term note programme.
“We are comfortable with the present capital adequacy,” he said, highlighting that the bank was sitting on an 18.1% capital adequacy ratio with core capital (Tier I) alone at 16.7% compared to 21.4% and 19.4% respectively a year ago.
“We have an internal trigger point, should the need arise, we will set in motion the capital raising,” he said, without divulging what the internal trigger point is.
On business growth for this year, McCall said it would be in line with what the bank had achieved in the previous year. Loans and advances surged 59% to QR20.7bn, which drove total assets to gain 23% to QR 41.3bn, the highest ever achieved by the group.
However, McCall said one should not look at replicating that figure “but that is the benchmark we should be looking at.”
Acknowledging that net interest margins continued to be under pressure, he said if business picks up in the year, then the bank ought to see some relief in terms of margins.
On international business, which is one of its three-tier strategies, he said the bank would expect a bigger slice from its French subsidiary, which in 2013, contributed 12% to the group’s profit and 18% to operating income.
The French subsidiary, which has Paris as well as four UAE branches, contributed QR68mn to 2013 profit.
On the domestic market, the bank said “in 2014 it will strongly communicate the preferred customer message of being more exclusive and tailored, and make its market presence felt. “We will continue to implement our identified list of strategic initiatives and focus on areas that represent the best opportunities for al khaliji to achieve growth in excess of our peer group in our chosen segments,” Sheikh Hamad said.