Qatar’s banking sector saw “positive” results in 2019, with an average 5.5% growth in net profit, which is attributable to higher margins, continued cost control, and a clear focus on risk, a new report has shown.
The local banking sector continues to prove strength and resilience as Qatar banks saw growth in their asset base by 9.3% despite the liquidity pressure, KPMG said in its report titled ‘‘New Age Banking’.
Market sentiment has also reflected these fundamentals with the share prices of all listed banks, except one, showing an upward trend, although this trend has reversed in 2020 with an overall decline of 10.6% in listed bank share prices in Qatar from January 1 to April 30 this year.
Listed banks in Qatar compared well to their regional counterparts, which was reflected in them having:
n The second highest return on equity at 13.2%
n The highest non-performing loan provision coverage ratio at 78.1%
n The lowest cost to income ratio at 26.5%
n The largest bank by total assets being QNB at $259.5bn.
About the report, Omar Mahmood, head, Financial Services for KPMG in the Middle East & South Asia, and partner at KPMG in Qatar, said, “The financial trends identified through our analysis were largely positive, which, given the unique political and economic circumstances the region has witnessed in recent years, is particularly impressive, reflecting the continued resilience of the banking sector.”
On another note, the Covid-19 pandemic that the world is facing since the beginning of the year 2020 is having unprecedented impact on the financial markets globally and locally and creating a unique situation for the industry because of the implications for operating models, employees, suppliers, customers, and the drop in oil prices that all affected financial results.
Banking experts agree that the sector will be dealing with the effects of this pandemic for the foreseeable future, leading the banking sector to evolve, and only agile and flexible banks that are willing to transform will succeed and secure their financial strength for future growth.
Looking to the future of the financial services sector in light of the current pandemic we are experiencing, Mahmood commented: “We are witnessing banks evolving at a faster pace than ever before and in some cases transforming their business models and venturing into “new age banking”, be it through the use of Artificial Intelligence (AI), Robotic Process Automation (RPA), or by launching digital only branches to serve their customer base more effectively.
“We expect banks to continue to aggressively pursue technological advancement and use revamped business platforms, by partnering and collaborating with various fintech firms.”
Mahmood: Banking sector to be resilient.
