Qatari banks will keep primary focus on the local market, as opposed to looking overseas for growth in view of the 2022 FIFA World Cup and in line with the Qatar National Vision 2030, KPMG in Qatar has said.
Qatari banks will also most likely continue with a measured and cautious approach to lending, particularly to the small and medium enterprises, real estate and contracting sectors, given the credit challenges experienced in 2018, KPMG said in its report entitled ‘Embracing Digital’.
In KPMG’s view, Qatari banks will continue to look to access the capital markets for funding (through EMTN and sukuk issuances) and local capital issuances given that the State of Qatar's outlook had been upgraded to stable in late 2018 by rating agencies.
Liquidity is expected to improve with further issuances in the capital markets and support from the state is to continue, it said.
The regulator, KPMG said, will continue to implement the Basel III capital requirements, with additional domestic systemically important banks (DSIB) and counter cyclical buffer (CCB) requirements to be gradually phased in, resulting in higher capital adequacy requirements for banks to meet.
With increasing regulatory support for the fintech sector through Qatar Development Bank (QDB) and the Qatar Financial Centre (QFC)-lead initiatives, KPMG expects new players to enter the market and new alliances to be formed in 2019.
The continued focus on innovation and efficiency will remain; KPMG said, and noted that as banks look to differentiate themselves in a competitive market given the income pressures being faced and increasing regulatory requirements with efforts from the regulators. This is for ensuring greater financial inclusion and fostering financial innovation in line with the Second Strategic Plan for the Financial Sector 2017–22.
In line with the Second Strategic Plan for the Financial Sector 2017–22, and in advance of the upcoming Financial Action Task Force (FATF) review of Qatar, a greater emphasis is expected on enhancing AML/CFT effectiveness for improving the integrity of and confidence in the financial system, the report said.
And in line with the new corporate governance code issued in late 2017 by the Qatar Financial Market Authority (QFMA) for all listed companies including banks, there will be a greater focus on internal controls over financial reporting and compliance with corporate governance requirements in line with international best practices, KPMG said.