QNB expanding to Asia

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CEO of the Qatar National Bank, Ali al-Kuwari expects that expanding into Asia will help lender offset the effect of the isolation of Qatar, led by Saudi Arabia. The shares are rising.

Qatar National Bank being, which is also biggest bank of Middle East by property will try do lower the income that comes from its domestic market from 63 percent to 50 percent by 2020. QNB will also turn its representative in China to a branch, and open a new branch in Hong Kong.

QNB does business in 31 country, and according to al-Kuwari, their “diversification is really working and helping to overcome any crisis” adding, “We are going to be pushing more in Southeast Asia.” On Wednesday, he said the bank will open new branches in Kuwait, India and Oman.

After Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut all of their relations to Qatar, its lenders are coming under pressure. Certain banks from these four countries cu their exposure to Qatar while Qatari lenders are boosting interest rates on dollar deposits to sustain the liquidity. These four countries accused Qatar of helping Islamist terrorists, and Qatar denied it.

Qatar’s shares went 4.2 percent up at the close in Doha. The stock dropped 5.9 percent since the isolation has started, helping to drag the Qatar’s main stock gauge down 4.6 percent. With a weighting of 17 percent QNB is index’s biggest member.

Al-Kuwari stated that the effects from the blockade are little to none, he is leading the bank for 4 years now. He added that Qatar’s neighbors “represent less than 5 percent of the balance sheet. Even if the situation continues forever, to diversify 5 percent is so easy and doesn’t really take so much.”

After provisions and expenses dropped, the bank reported a 2 percent increase of the second-quarter profit to 3.45 billion riyals

The annual profit guidance is being kept at 6 percent to 8 percent, it is expected from its diversified revenue and funding sources to mitigate the regional standoff.

“We didn’t see any abnormal increase in the cost of funding…QNB is a highly-rated institution, it’s an AA institution. Investors love the QNB story, love the Qatar story.” said al-Kuwari

Arqaam Capital Ltd. reported last month that Qatar’s bank could be left “vulnerable” it the dispute between countries continues, as it relies mostly on foreign funding.

The bank spent about $6 billion on acquisitions in countries like Egypt and Turkey. It bought Societe Generale SA’s Egypt unit and a 20 percent stake in Togo-based pan-African lender Ecobank Transnational Inc. It bought Turkey’s Finansbank AS for $3 billion in 2015 too.