Qatar Economic Review 2006(September) - QNB

7. Banking SectorThe Qatari banking sector comprises of a combination of national and foreign banks. A total of 16banks currently operate in Qatar, eight of which are Qatari institutions, including five commercial banks(ahlibank, Commercialbank, Doha Bank, International Bank of Qatar, and Qatar National Bank) and threeIslamic institutions (Qatar Islamic Bank, International Islamic and Al-Rayan Bank). Also represented is thelocal branches of seven foreign banks including Arab Bank, Bank Saderat Iran, HSBC, Mashreqbank,BNP Paribas, Standard Chartered, and United Bank. A specialised government owned institution - QatarIndustrial Development Bank, was established in 1997 and provides financing to small and mediumscale industries.In 2005, Islamic banking made significant inroads into the domestic banking system due to its tremendousgrowth potential and popularity, with commercial banks getting approval from the QCB for the first timeto set up fully compliant Islamic branches in Qatar. QNB was the first commercial bank to set up a fullycompliant Islamic branch, followed by Commericlalbank and Doha Bank. Another significant developmentin domestic banking was the entry of a commercial bank into the mutual fund arena. QNB was the firstbank in Qatar to establish a mutual fund - Al Watani Fund - for both locals and expatriates.Banking Sector - Interim Results 2006Interim results of Qatari Banks (excluding International Bank of Qatar) for 2006 reveal anotherprosperous year with Net Profits showing an increase of 58.1% for the first half of 2006, to reachQR 2,818.5 million (Table 7.2), compared to QR 1,783.0 million achieved during the first half of 2005.During the first half of 2006, Total Assets of Qatari Banks increased by 19.4% to reach QR 130.8billion, compared to QR 109.5 billion as at year-end 2005. Customer Deposits rose by 16.0% duringthe first half of 2006 to reach 89.3 billion, with loans and advances increasing by 17.9% to reachQR 74.9 billion. Total Shareholders’ equity reached QR 24.2 billion as at June 2006.The market share of QNB and other Qatari banks as at June 2006 are presented graphically inFigure 7.1, while the profit distributions of local Qatari banks during 2001-2005 is highlighted belowin Table 7.1.Table 7.1Qatari Banks Dividend Distribution(2001 - 2005)QNB2001 2002 2003 2004 2005Cash Dividend (%) 40% 45% 52.5% 60% 75%Bonus Shares Nil Nil Nil Nil 1 for 4Doha BankCash Dividend (%) 28% 20% Nil Nil NilBonus Shares Nil 3 for 10 7 for 10 7 for 10 8 for 10CommercialbankCash Dividend (%) 25% 25% 30% 40% 40%Bonus Shares 1 for 5 1 for 4 1 for 4 4 for 10 1 for 2Qatar Islamic BankCash Dividend (%) 20% 10% 10% Nil 25%Bonus Shares Nil Nil 1 for 5 7 for 10 1 for 2ahlibankCash Dividend (%) Nil 10% 10% 18.75% NilBonus Shares Nil Nil Nil Nil 1 for 3International IslamicCash Dividend (%) 15% 10% 10% 10% NilBonus Shares Nil 1 for 4 1 for 4 3 for 10 1 for 1Source: Banks’ Annual Reports and Published Information.BANKING SECTOR 40