Doha Bank eyes 50% assets from global operations in 5 years

By Santhosh V Perumal/Business ReporterDoha Bank, which is planning to have presence in four more overseas markets, aims 50% of its total assets from international operations within the next five years.The lender, which has assets worth QR67bn in 2013, also cautioned that the return on equity and net interest margins are likely to shrink this year owing to investment caps and heightened competition in the domestic space.“At present, the international assets allocation is 10% of total, but we plan to scale it up to 50% in the next five years with more international presence,” Doha Bank group CEO R Seetharaman said.Doha Bank had reported a net profit of QR1.31bn in 2013 on strong operating earnings, aided by robust lending. Its assets and loans grew 21% and 22% respectively.The bank, whose operations span across 15 countries and is on an organic growth path, has a careful strategy for global expansion, considering the linkages between Qatar and its trading countries.It had recently opened offices in Toronto (Canada), Sydney, Australia and Sharjah. “We have identified four locations for further international expansion,” he said, without revealing details as the proposal was pending regulatory approvals.Although he did not estimate bottom line growth for this year, Seetharaman said he expects loans and advances to grow by a minimum of 15% and a maximum of 20% this year.About return on shareholders’ equity, which is now at 17.9%, he said although it has come down from its previous levels, it has to be seen against the global average of 10%-12% and that it still remained high despite increasing global operations. However, he also cautioned that return on shareholders’ equity is expected to fall to 15% by this year.About the bank’s recently concluded QR2bn capital mop up through Tier I note, which also had an interest component, Seetharaman declined to divulge details regarding the coupon as it was a private placement.The Tier I note is to expand the capital and support the overall momentum, he said, adding that Tier I capital adequacy ratio stood at 16.6%.“This will drive significantly higher limits for single obligor, real estate and investment and country exposures to capitalise on the growth opportunities in the market as well as improve our competitive edge,” he said, adding the bank would gradually deploy the funds.On the non-performing loans, he said it stood at 3% of total loans but had 95% provision for coverage.India branch to start in ‘six to eight months’By Santhosh V Perumal/Business ReporterDoha Bank will start a full-fledged branch in India in the next six to eight months and will adopt a GCC-banking model tailored to domestic needs as part of differentiating it from other umpteen banks in the Asian country.“Ours will be a GCC (Gulf Cooperation Council) banking model but customised to Indian situation. This in itself will be a differentiation. We have to look at the dynamics and then accordingly customise, in which we are good at,” Doha Bank Group CEO R Seetharaman said, when asked what value proposition it could infuse in the 80tn-rupee Indian banking sector.The bank, which has been granted the licence by the Reserve Bank of India to commence full-scale banking operations in the country, is planning to target the growing retail sector because of the huge opportunities, especially in the electronic banking.“There is a huge potential in the mobility,” he said, adding the bank would also offer wholesale and retail banking, treasury and trade finance services.Asked by when Doha Bank would commence operations, he said: “It will take six to eight months to start operations, pending regulatory compliance and others.”The bank would open a branch in the commercial capital of Mumbai but it is also exploring options to have presence in other cities.“India, per se, is a continent (because of the size). We will explore options once we begin operations and consolidate,” he said, when specifically asked whether Doha Bank has plans to expand into other Indian cities.He said the Indian branch, which will be its fourth largest full-fledged operations overseas, would further enhance its niche role in facilitating enhanced trade between Qatar and India. Qatar-India bilateral annual trade is around $16bn in 2012-2013.Doha Bank is the first Qatari Bank to have full-scale operations in Dubai, Abu Dhabi, Kuwait and India.“Our operations in India will pave the way for the bank to support all expatriates, especially in remittances through all our existing branches,” he said.Doha Bank has been supporting various Indian companies present in Qatar for their local banking needs, he said, adding it would extend services and facilities to the same companies for their operations in their home markets as well.