Doha Bank, Qatar’s fourth largest lender by assets, said that while it expects to see consolidation in its GCC operations in 2016, the bank is still eyeing expansion into new markets that may potentially include Iran.
“We are looking at options for new markets. It’s an opportunity in certain locations now — you have seen sanctions being lifted in certain countries, so if the regulators and shareholders approve, we will look at it. It is still subject to so many ifs and buts,” R. Seetharaman, chief executive officer of Doha Bank, told Gulf News.
Asked to confirm whether he was referring to Iran, the CEO declined to comment, but discussed the country saying, “The bigger picture is to recognise that sanctions are lifted, but it [the Iranian market] has to be fully operational. It’s still a work in progress. There are a lot of regulatory elements required, but as and when that happens, we’ll be ready.”
His comments come just a day after US Secretary of State, John Kerry, spoke in London, telling European banks they have nothing to fear in doing business with Iran. Banks across the world have been reluctant to take that step especially since there are still certain sanctions that include a ban on Iran-linked transactions in US dollars.
In terms of GCC operations, Seetharaman said he expects to see consolidation in financial performance during the rest of this year as lower oil prices take a toll on the bank, which is implementing cost-cutting measures.
He added that the bank is working on reducing its cost-to-income ratio to 33 per cent from 35 per cent in the first quarter of this year and 37 per cent last year.
“Wherever we need to scale down in terms of operating costs, staff costs, or occupancy costs, we’re doing it. We’re organising the retail and scaling down staff spend.
“I think 2016 will be an extension of performance last year, which was one per cent up [in net profit], and we see in the coming months more of consolidation in terms of profitability. There won’t be wide gaps between performance last year and this year,” he said.
Doha Bank reported a net profit of 354.2 million Qatari riyals (Dh356.9 million) for the first quarter of this year, marking a 16 per cent decline from the 420.2 million riyals recorded in the same quarter of 2015.
“With the drop in oil prices, the [GCC] region itself is going through a downturn in terms of GDP [Gross Domestic Product]. That has got a similar reflection in the overall economic momentum, and banking is a subset of the economy. With the changing face of financial service and the changing face of the region, your market risk is more,” Seetharaman said.
In Asia, Doha Bank is hoping to scale up its operations and expects to grow in India, but such plans are yet to be finalised.
The CEO was speaking at a session in Abu Dhabi on changing market dynamics, where he said banks should focus on liquidity challenges in the economy and accordingly realign their strategies.
Last week, during its general assembly meeting, Doha Bank’s chairman announced plans to raise $5 billion (Dh18.4 billion) over the next three years. This will be done through issuing Certificates of Deposits within a programme of up to $3 billion, and Commercial Papers within another programme of up to $2 billion.
