Doha: KPMG recently released its fourth edition of the ‘GCC listed banks’ results’ report, which analyzes the published results of listed commercial banks across the region for the year ended 31 December 2018. The report, titled ‘Embracing Digital’, has shown that Qatar’s banking sector saw positive results in 2018, with an average 9.5 percent growth in net profit, and 3.2 percent growth in total assets.

Speaking about the report, Omar Mahmood, head of Financial Services for KPMG in the Middle East & South Asia, and partner at KPMG in Qatar, commented, “Overall it has been a positive year for listed banks in Qatar. While profitability and assets have, on average, increased from the previous year, banks in Qatar have also managed to reduce costs by 1.3 percent on average, resulting in a sector cost-to-income ratio of less than 28.2 percent. With the lowest cost-to-income ratio in the region, these impressive results reflect the continued focus by the sector, and the country as a whole, on efficiencies to improve net profits.”

Mahmood further commenting on the findings in the report, added that, “another leading focus for banks over the next year will be credit quality, which remains a challenge, as loan impairment and non-performing loan (NPL) ratios increased from the prior year. Although NPL ratios remain relatively low when compared to international norms, 2018 saw higher ratios in comparison to the previous year.”

As predicted last year, the regulatory agenda continues to evolve on local, regional and international levels, driven by global developments. Mahmood further commented that, “New accounting standards, Basel III requirements and an increasing focus on Anti Money Laundering (AML) and Know Your Customer (KYC) will not only keep regulators busy in the year ahead, but will also drive banks to reshape their strategies to better prepare for, and effectively manage, tighter regulations, particularly in the new fast-paced digital era.”

Looking to the future of the financial services sector in light of the rapid technological advances we are witnessing, Mahmood commented, “In order for banks to differentiate themselves in a competitive market and remain relevant, they need to continue to innovate their practices and digitize their processes. Whether that be through their go-to-market channels, or through the use of innovative technology in the back and front office, we expect an increased investment in this space.

Commenting on Qatar’s efforts to embrace the digital agenda, Mahmood stated that, “Financial institutions and regulators are showing greater support for the FinTech sector, through various recent and upcoming initiatives, such as the launch of a local innovation hub and the expected opening of the first digital branch of an international bank in Qatar. The emergence of FinTech is only the latest wave of innovation to have hit the banking industry yet it has the potential to lower barriers of entry to the financial services market and elevate the role of data as a key commodity and drive the emergence of new business models.”

Additional insights in the report find that all countries across the region have experienced mergers or talks to merge in 2018. Commenting on the situation in Qatar, Mahmood said, “in early 2019, the merger of two unlisted banks was completed which is expected to trigger further consolidation initiatives across the banking sector in our view. The merger of banks is expected to combine market share and improve pricing and cost synergies, which may make them more competitive in the context of shrinking margins currently being faced by banks in Qatar.”

Qatar National Bank (QNB) remains the largest bank in the region, by assets and profitability, with a market share of 58 percent of total listed Qatar banking assets, showcasing their dominant position in the sector across the region. In comparison to 2018, there has not been a significant impact on capital adequacy ratios in Qatar as a result of the adoption of the IFRS 9, which introduced new requirements for classifying and measuring financial assets and liabilities.

The report titled ‘GCC listed banks’ results: Embracing Digital (available here), analyzes the results of selected listed banks in the Kingdom of Bahrain, the State of Kuwait, the Sultanate of Oman, the Kingdom of Saudi Arabia, the State of Qatar and the United Arab Emirates. It summarizes bank’s results against selected key performance indicators for the year ended 31 December 2018 and compares these with the same information for the year ended 31 December 2017.

- Ends –

For further information, contact:
Marina Bucar                                                                            Joumana Elnaggar
Manager, Marketing Communications                                         Senior executive, Marketing Communications
KPMG in Qatar                                                                          KPMG in Qatar
M: +974 7047 6056                                                                  M: +974 5518 2882
T: +974 4457 6491                                                                   T: +974 4457 6523
E: mbucar@kpmg.com                                                               E: jelnaggar@kpmg.com 

About Omar Mahmood
Omar has worked in the Middle East and the UK for many clients with local and global operations. He is the head of Financial Services for KPMG in the Middle East and South Asia region. Omar works closely with Qatar’s banks and regulators, advising them on emerging issues, industry trends and regulatory change. 

About KPMG: 
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 153 countries and territories and have 207,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG in Qatar is a member firm of KPMG global network of firms.  Established in the state of Qatar in 1978, the firm has been growing in stature and reputation ever since.  KPMG in Qatar provides audit, tax, and advisory services to a wide array of clients operating in different sectors.

© Press Release 2019

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