The banking and financial services segment, which has 12 constituents, saw its overall net profitability decline to 3.81% in the first quarter of 2013 against 12.88% in the previous year quarter amid reports of inertia on credit pickup as well as low non-interest earnings.
By Santhosh V Perumal/Business Reporter
Qatar’s financial landscape presented a mixed picture in the first quarter of this year with the banking sector witnessing net profitability decline, while the insurance sector exhibited a splendid performance.
The banking and financial services segment, which has 12 constituents, saw its overall net profitability decline to 3.81% in January-March 2013 against 12.88% in the previous year quarter amid reports of inherent inertia on credit pickup as well as low non-interest earnings.
The banking sector reported a total net profit of QR4.26bn in Q1; growth was weighed down by shrinkage in profits of two entities.
However in the stock market, the banking and financial services index posted 4.62% gains to investors, outperforming the 20-stock barometer, which was up 2.62% quarter-to-date ended March 31.
Among the banking entities, QNB saw its profits growth slow down to 6.67% (compared to 17.44% in the first quarter of 2012), followed by Doha Bank at 1.37% (7.43%), Qatar Islamic Bank at -24.91% (20.87%), International Islamic at 5.55% (10.39%), Alijarah Holding at -10.62% (21.10%) and Dlala at 7.71% (26.49%).
On the other hand, Commercialbank saw improvement with a net profitability growth at 7.31% (against 2.73% in the year-ago quarter), Ahlibank at 14.04% (2.07%), Masraf Al Rayan at 13.19% (7.79%), Qatar Oman Investment Company at 9.58% (-6.51%) and Islamic Holding Group at 8.50% (4.43%).
“The credit pickup was rather slow but it is not something unusual in the first quarter. The pertinent issue is of the margins, which have been on the squeeze,” an analyst with a brokerage house said, adding the banks have, otherwise, found new ways of increasing their incomes through investment, particularly in sovereign instruments.
Although there is a vast reservoir of opportunities due to the mammoth capital expenditure laid out by government, banking sources said it would positively translate into the economy only after the projects are actually awarded. The government’s initiatives on the non-hydrocarbon sector itself would have a positive spin-off for the other sectors in general and banking in particular, they added.
On the performance of insurers, the first quarter of this year witnessed their overall net profit jump 25.53% compared to a 6.10 decline in the previous-year period.
Four of the five insurance companies reported gains in net profitability in January-March 2013 compared to three in the year-ago period.
Qatar Insurance witnessed 35.61% jump in net profit against 1.63% in the comparable quarter of the previous year, followed by Qatar General and Reinsurance at 17.46% (12.59%), Qatar Islamic Insurance at 5.03% (-26.08%), Doha Insurance at 0.37% (10.67%) and Al Khlaeej Insurance and Reinsurance at -19.19% (-53.45%).
As a spin-off, the insurance sector also stands to get a decent pie in Qatar’s infrastructure spend, the analyst said.
The insurance index gained 1.34%; while maximum gains were reported in industrials and consumer goods segments, whose indices have shot up 14.32% and 11.13% respectively quarter-to-date. The telecom and transport sectors have extended 9% and 8% returns respectively.
