Ahlibank Qatar board outlining its growth strategy to shareholders yesterday.
By Santhosh V Perumal/Business Reporter
Ahlibank Qatar, which is re-branding with new identity and outlook, is all geared up to venture into bancassurance as part of its strategy to boost fee-based income and diversify its income sources.
The bank, which doesn’t have any plans as of now to increase the current 25% foreign ownership limit (FOL), has lined up programmes to develop the UK private investment and property sector and kept options open on tapping Islamic debt, but ruled out mergers and acquisitions.
Shareholders yesterday agreed to the board’s proposal to foray into bancassurance, which is slated to be one of the fastest growing distribution channels of insurance in the Gulf region over the next two years.
“Their (shareholders) approval will help building infrastructure to allow us sell, in the future, bancassurance,” Ahlibank Qatar CEO Salah Murad said on the sidelines of annual general assembly meeting, which approved the financial statement and 30% bonus share for 2013.
In its GCC (Gulf Co-operation Council) Insurance Industry report, Alpen Capital said the regional insurance sector will expand annually 18.7% in 2012-2017, while economic development, population expansion and an improved regulatory environment will encourage bancassurance providers to step in and capitalise on growing opportunities.
Murad said the bank already has regulatory approvals but has “not entered into any dialogue with any insurance companies or formalised of that sort.”
To a query on how bancassurance will help enhance non-interest earnings, he said the bank has not gone into the micro aspects as it just got approved the enabling provision to “add the selling stream to core activities”.
Bancassurance, where insurance companies and banks collaborate to provide insurance products through a bank’s existing customer base, is still in its nascent stages in the Gulf region.
Asked whether the bank plans to increase the FOL to 49% in the wake of Qatar’s upgrade by MSCI to emerging market, he said “our Articles of Association allows us to have FOL up to 25%. We have to comply by the law, which says 25% and we are staying at that level.”
On the re-branding initiative after the exit of Bahrain’s Ahli United Bank and Qatar Foundation’s purchase of a controlling 29% stake, Murad hinted that the lender may not go for name change as he said “we would like to keep things as they are but there has to be new identity and new outlook.”
He said the bank would energise and reinvigorate the retail segment, whose share in overall net profit and revenue was much lower than that from the corporate banking.
In 2013, profits from corporate banking, treasury and investments stood at QR418.38mn, about 80% of the bank’s net profit of QR525.69mn; whereas profit from retail, private banking and wealth management stood at QR107.31mn (20%).
Total revenues from corporate banking, treasury and investments amounted to QR613.33mn, which was 72% of total revenue of QR849.66mn in 2013; while those from retail and private banking and wealth management was QR236.33mn ((28%).
“We have high hopes for this new year, especially considering the increasingly fast pace of Qatar’s immense economic and urban growth. This year’s plan also includes new programmes to develop the UK private investment and property sector,” Sheikh Faisal bin Abdul-Aziz bin Jassem al-Thani, Ahlibank Qatar chairman and managing director, said.
On domestic network, Murad said two or three branches may be opened, but that was inclusive of relocations.