Qatar's Doha Bank boosts capital with $549m bond sale

  • Share via facebook
  • Tweet this
  • Bookmark and Share
Doha Bank CEO, R Seetharaman.

Doha Bank CEO, R Seetharaman.

Qatar's Doha Bank said on Tuesday returns on its share capital would be lower this year due to tough competition in its home market, though a successful bond sale would boost its financial ratios.

The bank, the fifth-largest by assets in the Gulf Arab state, finalised the sale of the QR2 billion ($549 million) bond - which enhances its tier 1, or core, capital - on the last day of 2013, chief executive R Seetharaman told reporters at a press conference.

"Two billion was added to the equity from a note that was issued on the last day of last year," Seetharman told reporters, adding the bank as no immediate plans for further bond issues.

Doha Bank has been raising its reserves in the last year to improve its capital ratios which, while high by international standards, were below many of its local peers.

It had raised QR1.55 billion from a rights issue in March which boosted its share capital by 25 percent.

Following the bond sale, Doha Bank's tier 1 capital ratio stood at 16.6 percent, Seetharaman told the event on the bank's 2013 results.

The lender reported flat net profit of QR1.31 billion while assets and lending grew 21.3 percent and 21.8 percent respectively.

Lending growth in Qatar has been a major driver of banks' profits in recent quarters and is expected to remain high for the medium term as the Gulf Arab state spends billions of dollars on infrastructure and preparations to host the soccer World Cup in 2022.

But competition is fierce, with 18 local and foreign banks serving a population of just 2 million people, and one player having a more than 20 percent market share.

Seetharaman would not be drawn on a net profit forecast for 2014 but said Doha Bank's return on equity would fall to around 15 percent in 2014 from 17.9 percent last year.

"There are a growing number of banks locally... it's eroding margins," he said.

Some Qatari banks have looked to overseas acquisitions to counter tighter conditions at home, withQatar National Bank and Commercial Bank of Qatar buying businesses in Egypt and Turkey respectively in 2013.

Doha Bank has pursued organic expansion up until now, getting approval to start operations in India in December, and this would continue as increased regulation made buying lenders overseas more difficult, Seetharaman said.


Market Performance

Doha Bank
0.2 0.4 (%)
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Coming to America

Coming to America

As Barack Obama seeks to rebalance the bloated US economy, the...

Should the Gulf introduce VAT?

Should the Gulf introduce VAT?

The GCC’s plans to bring in value-added tax were withdrawn as...

Why are some of the world's biggest banks leaving the UAE?

Why are some of the world's biggest banks leaving the UAE?

Large Western banks have been selling off their local assets...

Most Discussed
  • 17
    Nakheel PR: The toughest job in Dubai?

    You forgot to mention the sewage pit between JLT and Jumeirah Park and the terrible landscaping in Jumeirah Park The chain link fencing they want to install... more

    Monday, 30 March 2015 9:05 AM - An Emaar Fan
  • 14
    Dubai Int'l T1 is too congested, says Indian airline boss

    Question: All you people, criticizing my comment, do you work for Air India by any chance?

    Additionally, for all the whiners, I will provide you... more

    Tuesday, 31 March 2015 12:50 PM - Mosa
  • 9
    Post traumatic stress?

    I once had a Emirates Post employee hang up on me when I asked her to repeat something. That said, the worst is my management company, Kingfield Management... more

    Sunday, 29 March 2015 6:07 PM - Sarah