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Doha Bank: Pursuing a philosophy of sustainable development [Banker Middle East](Banker Middle East Via Acquire Media NewsEdge) What role does the financial services sector have to play in boosting the global and local economies? "The financial services sector plays a significant role in economic development both through lending and investing. Lending is mainly through the wholesale and retail segments and spread across various sectors such as project finance, contract finance, trade finance, SME and retail finance. Investing is mainly spread across bond, equities and alternative investments. Monetary and fiscal actions also impact the activities of the financial services sector and therefore economic development. "G20 aims to lift global growth over the next five years by more than $2 trillion, creating tens of millions of new jobs across the globe. The plan is to get to a potential increase in G20 GDP of two per cent or more. "The financial services sector can also play a key role in the revival of the global economy within the regulatory framework. However regulatory reforms after the crisis have focused on safety and stability. At the same time, the growth factor should also be given appropriate consideration and hence regulatory reforms should achieve balance between economic growth and financial safety. Non - hydrocarbon diversification is an area of focus in the GCC and equities markets that are expected to become more mature. Bilateral trade relationships between GCC and various blocks are also expected to pick up. Financial services will support economic development by spreading their presence in these sectors through appropriate offerings." Your 2014 half year results cite a return on average equity of 16.5 per cent... how have you achieved this and how will you maintain this level of return? "Net profit for the first half of 2014 increased by 5.2 per cent YOY and reached QAR 787 million. There was improvement in interest income, fee and commission income and investment income which contributed to the surge in profits. Interest income improved mainly on account of a surge in loan books. Net loans and advances increased to QAR 45.3 billion, registering a growth of more than 25.3 per cent YOY. Investment income improved on account of MSCI upgrade of Qatar. Fee and commission income improved on account of growth in non-funded facilities. Total assets had a growth of 21.6 per cent YOY and reached QAR 72.0 billion. Customer deposits showed a YOY increase of 30.5 per cent to QAR 44.5 billion as at 30 June 2014, which is evidence of the strong liquidity position of the bank. The bank's total equity is at QAR 10.9 billion, registering an increase of 25.3 per cent during the last 12 months. Through the efficient asset allocation model the return on average equity is 16.5 per cent which is one of the best in the industry. The bank has achieved a very high return on average assets of 2.3 per cent which is a clear demonstration of the effective utilisation of shareholders' funds. Doha Bank has maintained a consistent track record on its financial performance in the last decade, as part of its sustainable development philosophy." In April you agreed to purchase HSBC Bank Oman's Indian business...does this presage further expansion in the sub-continent? What are the prospects for Doha Bank in India? "Initially, we would expand in India through our office in Mumbai followed by the purchase of HSBC Bank Oman's operations in India. Going forward we would selectively expand in India based on the initial experience. Once we go through this process and gain market share, we will grow in India though the route permissible as per RBI's regulations which change from time to time. Doha Bank will adopt a GCC-banking model tailored to domestic needs. It will focus on bilateral trade, investment and banking relationships between the two blocks and also leverage on economic linkages. Doha Bank aims to capitalise on the large number of Indian expatriates and Indian companies in Qatar as well as the wider GCC region. Doha Bank will focus on Indian corporates targeting GCC. Doha Bank will focus on remittances segment and also on retail products and wealth management products to NRI customers in India. Doha Bank will leverage on its GCC network and support clients at both the ends." Doha bank, was among the listed Qatari companies to be specifically included in the MSCI emerging index - what impact, if any, have you seen on your share register? "Based on MSCI development, all companies listed on the Qatar Stock Exchange are expected to increase the Foreign Ownership Limits in their companies - draft law in Qatar has also been approved in relation to this. We are taking necessary steps to increase foreign ownership and over a period of time, we can expect to see changes in our share register." Will a higher international profile for the bank make it easier to access funds and expand further abroad? "An international profile across the globe enables us to be more visible beyond the Qatar/GCC region. We have sustained a strong rating from the rating agencies on account of our financial performance. Our strong rating along with our international profile has enabled us to tap global markets for fund raising both through debt and equity at competitive rates. We build our international presence in those countries which provide significant bilateral trade and investment opportunities with Qatar/ GCC region." How important is the bank's IT backbone? As a general rule, would you agree that the lifecycle of banking systems is getting shorter because of the evolution of both internal and external demands on them? "IT is an integral part of banking business. Technology plays a pivotal role in delivering product and services to our customers through innovative solutions which ensure that (a) customer service is improved (b) overall Turn-Around-Time (TAT) is minimised and (c) provide financial services to our customers as self-services as much as possible. Considering rapidly changing technology within banking as well as other segments of life such as social media, adaptability among the masses is making the life span of an application shorter which means that continuous improvement process has a shorter frequency in order to keep up with the pace of an ever-changing environment. The major contributing factors are internal and external customer demands which are mainly due to continuous education and knowledge." What is the significance of achieving ISO 20000- 2011 certification? "ISO20000-2011 is the first worldwide standard specifically aimed at IT Service Management. It describes an integrated set of management processes for the effective delivery of services to the business and its customers. Doha Bank has defined its policy for IT Service Management as, "To adopt and adapt state of the art IT technology integrating people and IT to support and improve all business processes". The ISO 20000 certification is an assurance of quality in terms of IT services provided to business departments and branches of the bank. It validates not only how IT services are set up initially but also the ongoing procedures that are involved in providing the services, including how they are updated, managed, documented, etc. The ISO certification also represents official recognition for Doha Bank's technology department's commitment to quality, to applying good business practices, and their expertise as a provider of IT services to the bank." You recently signed a partnership deal with Enterprise Qatar, what will that mean for the services the bank offers and how profitable will the business you attract, be? "Doha Bank will provide a comprehensive package of services and facilities to the companies rated by Enterprise Qatar (EQ). The package on offer to approved companies includes credit enhancement, discounts for debt arrangement and loans processing fees, preferential handling upon submitting requests for services, a reduction of security requirements and competitive pricing. The agreement of Doha Bank with EQ forms part of the activation process of the Rating and Accreditation programme, launched earlier by EQ to help entrepreneurs and SMEs improve their commercial and financial processes. This initiative from EQ for promoting SME rating in Qatar will help Doha Bank to make better informed credit decisions which will in turn help DB to improve the overall credit quality of our SME portfolio." Technology appears to be driving developments in your retail banking offering, for example your link with online booking portal Q-tickets. How do you see the bank's product suite evolving and how will product delivery change? "Technology is a key success factor in preparing and launching a successful product for our customers and keeping our strategy and objective in focus. We always ensure providing customers with innovative products and services on an anytime, anywhere basis. Our retail products are mainly driven by technology solutions considering customer service and ease, as a top most priority. Almost all retail products are technology dependent and therefore, agile technology solutions are the need of the day. Doha Bank has actively leveraged on digital banking to provide an advantage to its retail customers. We also have Doha Souq, where all customers can electronically access products and services." What risks are involved in IT changes? What also needs to change to ensure proper levels of security for both the bank and its customers? "IT changes need to be monitored through proper governance framework. A strong user acceptance testing and quality control plays a major role to minimise/mitigate associated different risks like operational, reputational as well as security. Due to the increased security risks over ATM hardware and software, Doha Bank with the help of ICTQatar have completed an ATM Security Assessment. We introduce new policies and standards that addresses the dynamic nature of information security, e.g. Social Media Security Policy and Standards. Information security awareness is an ongoing activity by our Information Security Team as mandated by the Central Bank's regulations. Our IT is ISO20000 and ISO27001 certified unit. We have bank wide ISO27001 certification too. We have ITSM based processes in place which ensure that we follow best practices. We have IT GRC in place, which also ensures that we adhere to governance standards and perform regular risk assessments." What do you see as the biggest challenges and the biggest opportunities facing the bank in the next five years? "Doha Bank has moved from a local to a regional and then into a global institution today. The key challenge is to recognise the changing market dynamics to the business model and then identify business opportunities taking into consideration the new regulatory frameworks. Doha Bank will strengthen its footprint in the global space where there are opportunities for Qatar-based institutions to capitalise on bilateral trade, investment and banking relationships. We will also be creating a new generation bank with a focus on key segments such as wholesale, retail, treasury and investments. We will be driven by the philosophy, 'the customer is king' and will leverage on digital banking to provide innovative solutions to our customers. Stakeholder managers will also be key, with a prime focus on customers, regulators and investors." "Sustainable development is also an area of thrust which is demonstrated by our consistent financial performance and by our environmentally friendly initiatives. In the local space, opportunities also arise from Qatar's economic diversification and spread across the contract sector, real estate and retail. The bilateral trade relationships between GCC and other blocks are expected to pick up and provide opportunities in trade finance. GCC equity markets such as Saudi Arabia, UAE and Qatar are going to be more visible for global investors. Economic growth and fundamentally strong companies' stocks will provide opportunities. Wealth management will also be a potential opportunity. "SME is going to be the backbone for Qatar and is also an area evidencing interest. Other major challenges also include increased competition, surging interest rates after a long-period of low interest, execution risks in geographical expansion and improving key performance indicators such as ROAA and ROAE which are expected to drop in the near future. The preparations for FIFA 2022 and Dubai World Expo 2020 will become more visible in the next few years and we should look forward to more opportunities and challenges in the region." The bilateral trade relationships between GCC and various blocks are also expected to pick up. Financial services will support economic development by spreading their presence in these sectors through appropriate offerings (c) 2014 CPI Financial. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |