Qatari banks flush with cash from local deposits

Qatari banks have been flush with cash, owing to an increase in local deposits and borrowing down, which bodes well for the economy, on the back of high state spending on development schemes and projects related to hosting the 2022 soccer World Cup.

Local deposits are off-setting loans, which bodes well for the Qatari economy.
Local deposits are off-setting loans, which bodes well for the Qatari economy.

Qatar’s economy is expected to continue benefiting from high state spending on development schemes and projects related to hosting the 2022 soccer World Cup.

Following shareholder assent, bonds to the tune of $1.75bn have been issued by Qatar’s Al Khaliji Commercial Bank which, the bank’s chief executive said would be used for financing activities within the country.

Owing to government-related entities cutting back on their international debt, bond issuance from Qatari borrowers has been rare in the last 18 months, with banks being flush with cash from local deposits and in no need of outside funding.

Commercial Bank of Qatar, completed a $750 million deal in June 2014.

According to Reuters, any deal from the sixth-largest lender by assets in the Gulf Arab state is therefore likely to be well received by investors looking to gain access to Qatar’s economy, which is expected to continue making good from increased state spending on projects and developments associated with hosting the FIFA World Cup 2022.

“The majority (of the cash) will be used for financing internally because the main focus of the bank is to invest inside Qatar,” Fahad al-Khalifa, the bank’s chief executive, told its annual shareholder meeting.

Speaking to Reuters after the meeting, Khalifa said part of the $1.75bn allowance could be sold this year, although he declined to give specifics.

“We will hit the market for sure and have a roadshow and see how the prices are, the attitude and appetite of the market,” Khalifa said.

Al Khaliji has issued one international bond previously, selling a $500m five-year deal in October 2013. It was trading to yield 2.685% at 1445 GMT, according to Thomson Reuters data.

The bank reported a 2.2%increase in net profit for 2014 last month and Khalifa said he was optimistic the bank would record further growth in 2015.

“I hope, God willing, that we will continue our growth and I expect that profits will be better than last year,” he said, while declining to give a specific percentage.

 

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