Qatar National Bank looks to Asia to offset impact of isolation drive

DOHA • Qatar National Bank's (QNB) expansion into Asia is helping the lender offset the impact of the ongoing Saudi-led campaign to isolate the gas-rich Arab state, said its chief executive Ali al-Kuwari.

The Middle East's biggest bank by assets aims to cut the income generated from its domestic market to 50 per cent by 2020, from about 63 per cent currently, said Mr al-Kuwari in an interview, his first since the stand-off began on June 5.

The bank will apply to open a branch in Hong Kong this year and convert its China representative office to a branch that can receive deposits, he said.

"We are going to be pushing more in South-east Asia," added Mr al-Kuwari at the bank's headquarters on Wednesday.

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"We do business in 31 countries and our diversification is really working and helping to overcome any crisis." The bank also plans to open new branches in Oman, Kuwait and India, he said.

Qatari lenders are coming under pressure after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations and closed transport routes last month, accusing the nation of funding Islamist terrorism, a charge it denies.

Some banks in these countries have cut their exposure to Qatar amid concern of a widening of the blockade, while Qatari lenders are boosting interest rates on dollar deposits to shore up liquidity.

QNB shares climbed 3.7 per cent, the most in almost seven months, in Doha at 10.14am yesterday. The stock has dropped 6.4 per cent since the embargo on Qatar began, dragging the country's main stock gauge down 4.9 per cent over the same period. QNB is the index's biggest member with a weighting of about 17 per cent.

The impact from the one-month standoff "is very little", said Mr al-Kuwari, who has led the bank since July 2013. Gulf countries "represent less than 5 per cent of the balance sheet", he said. "Even if the situation continues forever, to diversify 5 per cent is so easy and doesn't really take so much."

QNB on Tuesday reported a 2 per cent increase in second-quarter profit to 3.45 billion riyals (S$1.3 billion) as provisions and expenses dropped.

The bank is maintaining its annual profit guidance at 6 per cent to 8 per cent and expects its diversified revenue and funding sources to mitigate the regional standoff, said Mr al-Kuwari.

A prolonged conflict between Qatar and its neighbours may leave the country's banking sector "vulnerable" because of its reliance on foreign funding, Arqaam Capital said in a report last month.

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A version of this article appeared in the print edition of The Straits Times on July 14, 2017, with the headline 'Qatar National Bank looks to Asia to offset impact of isolation drive'. Print Edition | Subscribe