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Tue 26 Apr 2011 05:50 PM

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Doha Bank may delay bond sale to next year

'Customer deposits are cheap. Borrowing at a higher rate doesn’t make sense for the institution,' says Raghavan Seetharaman

Doha Bank may delay bond sale to next year
Doha Bank CEO Raghavan Seetharaman.

Doha Bank may delay a planned bond sale until next year because of costs, the chief executive officer of Qatar’s fourth-biggest lender by assets said.

“It has to be cost effective before we get on with it,” Raghavan Seetharaman said in a telephone interview on Tuesday. “Customer deposits are cheap. Borrowing at a higher rate doesn’t make sense for the institution,” Seetharaman said.

Qatar’s central bank cut interest rates earlier this month for the first time in eight months after a slowdown in credit growth. The bank lowered the benchmark overnight lending rate by 50 basis points to 5 percent and the deposit rate by the same amount to 1 percent. Doha Bank said in December it planned to sell $500m of senior-debt bonds in the first quarter of 2011.

The yield on Qatar’s 10-year dollar bond maturing in 2020 has gained 6 basis points, or 0.06 percentage point, this year to 4.58 percent at 2:30 p.m. in Doha, according to prices on Bloomberg.

Doha Bank, which reported a 15 percent increase in first- quarter profit as revenue from lending rose, fell 0.6 percent to SR50.6 at the 1:10 p.m. close in Doha. The shares have dropped 22 percent this year.