Islamic banks play key role in Qatar’s financial sector

The Peninsula

Doha: Islamic banks are playing a vital role in Qatar’s financial and banking sector,  H E Sheikh Abdullah bin Saoud Al Thani, Governor, Qatar Central Bank (QCB), has said. In a statement issued on the occasion of  the launch of an annual report on Qatar’s Islamic banks’ performance, the QCB Governor said the central bank had adopted a proactive approach to address local and regional challenges to absorb any possible shocks the country’s banking sector may experience in the aftermath of the unjust blockade.

Marking the release of  ‘Bait Al-Mashura Finance Consultations’ 2018 annual  report on Islamic finance in Qatar, Sheikh Abdullah recalled that QCB had called on Islamic banks to early apply the Financial Accounting Standard No. (30) for Islamic Financial Institutions, in compliance with International Accounting Standard No. (9) regarding the calculation of the expected credit loss provision. With the application of these standards and requirements, Islamic banks have achieved positive results and their profits have increased by 8.5 percent compared to 2017. The capital adequacy and asset quality levels indicate that the banking sector in Qatar is able to withstand extreme stress scenarios, Sheikh Abdullah said.

“The promotion of Islamic finance knowledge awareness is a joint task of financial, research and academic institutions. The public needs to know the operational nature of these institutions, financing and investment instruments and nature and feature of their operations. In this context, the promotion of financial education is one of our strategic objectives at QCB that we are seeking to achieve”, the QCB Governor added.

“The Islamic Finance Report in Qatar 2018” showed the success of the urgent measures taken by the Government of the State of Qatar to address the crisis that was imposed on June 05, 2017 through the policies and structural reforms that were strengthened, which contributed to the management of the consequences of the crisis with unprecedented efficiency.

The report noted Qatar’s Islamic banks delivered a combined profit of more than QR6.5bn at a high growth rate of 8.5 percent for 2017 driven by revenue amounted 10.4 percent. Islamic banks’ financing was focused on the private sector and individuals and moved towards the consumer, industrial and real estate sectors. In Takaful Insurance Sector, the assets of the policyholders in Takaful insurance companies increased by 14 percent, while the Takaful insurance subscriptions increased by 2.3 percent. Additionally, these companies have achieved insurance surplus of QR46m. As regard to the Islamic Finance Companies, the assets declined slightly by a rate of 0.6 percent with variation in growth and decline among these companies. Despite the decrease in the revenues of the financing activities of these companies by (3 percent), it achieved profits of QR105.6m with a growth rate of 4.2 percent over 2017.

As per the report, Sukuk issuance by Islamic banks increased with a rate of 27 percent, while the Islamic banks issued Sukuk with a total value of QR12.6bn. In Islamic Investment Funds, all such funds performed positively with an average of 6 percent, the NAV of the unit holders of these finances was QR365m. As for the QE Al Rayan Islamic Index, it recorded an increase with a rate of 13.54 percent.

The assets of Islamic banks in December 2018 amounted to QR350bn, while QIIB ranked first among these banks in terms of asset growth in 2018 with a growth rate of 7.8 percent, followed by QIB with 1.9 percent. Over the past five years (2014-2018), the assets of Islamic banks grew at a compound annual growth rate (CAGR) of 6.4 percent. QIB was in the forefront where the assets thereof grew during the period at an annual growth rate of 9.8 percent, followed by QIIB with 5.5 percent, then Masraf Al Rayan with 4 percent, then Barwa Bank with 3 percent.

Over the last five years, the deposits of Islamic banks, as per the financial statements issued by them, grew at a compound annual growth rate of 4.3 percent. QIB came in the forefront, where the deposits thereof grew during such period with an average growth rate of 8.6 percent.

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