Qatari Bank Named As World’s Strongest In First Year On Bloomberg List
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The semi state-operated Qatar National Bank (QNB) has been named as the world’s strongest bank in Bloomberg Markets’ third annual ranking of global financial institutions, after seeing its profits rise by an average of 27 percent per annum over the last five years, thanks to strong government supervision and rapid international expansion.
The semi state-operated Qatar National Bank (QNB) has been named as the world’s strongest bank in Bloomberg Markets’ third annual ranking of global financial institutions, after seeing its profits rise by an average of 27 percent per annum over the last five years, thanks to strong government supervision and rapid international expansion.
This was the first time that QNB had been listed on Bloomberg rankings, which had required lenders to have at least $100 billion in assets before classifying them on five separate criteria – Tier1 capital compared with risk-weighted assets; nonperforming assets against total assets; and efficiency, a measure of costs against revenues.
QNB as such were able to make this year’s list, after a series of acquisitions in the Mideast and North Africa last year pushed it over the $100 billion threshold.
Singapore’s Oversea-Chinese Banking Corp. (OCBC), the world’s strongest bank for the past two years, dropped to second spot in the ranking, while two other Singaporean banks made the top ten ranking (DBS Group Holdings, 5th, and United Overseas Bank, 6th).
Canada also once again dominated the list with four entries in the top ten – Canadian Imperial Bank of Commerce, 3rd, Royal Bank of Canada, 4th, Bank of Nova Scotia, 7th and Toronto-Domino Bank, 8th.
Meanwhile the highest ranked U.S. bank was Citigroup at 9th, while only one other American bank made the top-twenty – J.P. Morgan Chase at 15th.
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The largest bank in the Middle East, QNB’s size in 2012 was larger than all other publicly listed domestic lenders combined. QNB also provided 66 percent of loans to the government and government-owned entities last year, while state agencies accounted for more than half of deposits, according to data provided by the bank.
[quote]“The bank is essentially an extension of the state,” told Akber Khan, director of asset management at Al Rayan Investment in Doha, to Bloomberg. “Any concerns about future capital adequacy or balance sheet strength are entirely redundant.”[/quote]But QNB’s CEO Ali Shareef Al Emadi denied that the bank’s strength was down purely to its government links, claiming: “We are very close to the government and government agencies, but we get deals on a very much commercial basis.”
“We lose deals; we get deals,” Al Emadi added.
According to Bloomberg, the turmoil surrounding Qatar’s Middle East neighbours over the past few years have also brought in a significant amount of business to QNB.
“We always see good liquidity coming to us when things get bad in the market,” Al Emadi said. “That’s a very strong signal from customers and investors that they view the bank as a safe haven.”
Nonetheless, with 50 percent of the bank owned by the nation’s sovereign wealth fund, the Qatar Investment Authority, some form of government help is not unexpected.
Unlike American banks for instance, Qatar National Bank has had no quarrel with the government over its size or the quality of its assets, said Bloomberg.
“Five years ago, the government’s goal was to make QNB the largest bank in the region,” said Al Rayan Investment’s Khan. “Growth has been astonishing, and the objective was achieved very rapidly.”
[quote]“The government will make sure it has the capital it needs,” Khan added.[/quote]Related: The Power of Qatar’s Money: How A Tiny Nation Can Wield Large Influence In The Middle East
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Over the past two years, QNB has made several high profile international acquisitions. During 2012, the bank purchased stakes in Iraqi and Libyan lenders, while In March 2013, it bought the Egyptian branch of France’s Societe Generale SA (GLE) for $2.45 billion. Additionally in 2011,QNB acquired a controlling stake in Indonesia’s PT Bank Kesawan.
[quote]“QNB’s profits have doubled in the last three years,” noted Khan. “For very rapid growth to continue, growth outside Qatar will be necessary.”[/quote]
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