Ahli Bank and the results of excellence

Article - November 26, 2012

Since 1983, Ahlibank has served its clients through a full array of products and services within major business segments

It may not be the biggest, but in only 30 years, Ahli Bank QSC has become one of the key firms in the financial sector in Qatar.

The bank was founded in 1983 with the purpose of providing banking services tailor-made for the needs of the country. Ahli Bank boasts a large integrated network of 17 branches in Qatar offering a host of products and services from corporate banking, treasury and investments and retail to private banking and wealth management.

The bank is listed in the Qatar Stock Exchange, with a market capitalisation of nearly QR 6.2 billion or EUR 1.34 billion as at November, 2012.

From the origin of the bank, it was clear that Ahli Bank was born with a strong focus on the corporate and financial segments. Qatar has experienced an economic boom supported by the oil and gas industry. The country needed the help of the financial sector to get funds for developing major infrastructure projects. Some analysts expect that Qatar will still see strong lending growth in the next decade, so the future of the business of Ahli Bank at home is guaranteed.

2011 was a landmark year for Ahli Bank, as it posted a net profit of some EUR 95 million, the highest in the bank’s history

According to SICO Research, a division of the Bahrain-based regional investment bank, Securities & Investment Company (SICO), Qatar has indicated that it will be undertaking major infrastructure projects worth QR820 billion or EUR 177 billion over the next five years. This should lead to strong credit demand growth, in the area of 18 to 20 percent compound annual growth rate (CAGR) during 2011-2016, the report said.

But Ahli Bank also has a growing retail customer business. Last year, the bank reported net profit of QR 442 million or EUR 95 million, the highest in the company’s history. Ahli Bank’s profits are still growing: during the first nine months of 2012 net profit grew 5 percent from the same period last year, to QR 367 million or EUR 79.2 million.

Ahli Bank has been recently awarded the coveted “Best Commercial Bank in Qatar” by leading international finance magazine World Finance and by Arabian Business at the prestigious Arabian Business Qatar Awards. The awards comes in recognition of Ahli Bank’s continuous commitment towards providing excellent services to its banking customers, and its vision to implement international best practices to ensure the delivery of trusted commercial banking services.

If we examine the financial data, these awards come as no surprise. It’s worth noting, for example, the growth in total assets, to QR 19.7 billion or EUR 4.3 billion at the end of the last quarter, even after the Qatar Central Bank last year ordered conventional banks to close their Islamic Banking operations by the end of 2011. Ahli Bank is the fifth Qatari lender by assets.

The growth of the business has been also healthy. Ahli Bank has a capital adequacy ratio of 22.1 percent NPL (Non Performing Loan). Coverage stood at 99 percent as of December 2011, something far from the numbers of the banking system in Europe. This performance was recognised by the international rating agencies when Fitch reaffirmed the bank’s credit rating of A- with a stable outlook, only two notches lower than Deutsche Bank, for example.

But even in Qatar, the financial system may face some handicaps. Experts expect some problems to access the funding. According to a recent research report by Citi, “as Qatar proceeds with its expansionary strategy, the domestic banking system is facing growing challenges to support funding the country’s ambitious growth strategy. Strong credit growth averaging more than 30 percent over the last 18 months, which has largely outpaced that of customer deposits (averaging 17 percent over the same period), resulted in a sharp rise in loan-to-deposits ratios (LDR), exceeding 120 percent at end-June 2012,” said the analyst of the bank.

But the executives of the banks expect a very encouraging performance for the bank and they think the business could benefit from the government’s budget spending for the fiscal year 2012-2013. In fact, they see many investment opportunities in the local market.