Investor Presentation - Doha Bank Qatar - Doha Bank...
Transcript of Investor Presentation - Doha Bank Qatar - Doha Bank...
July 2019Investor Presentation
1
Overview of Doha Bank
• Incorporated in 1979, Doha Bank is the third largest local conventional bank by assets in Qatar with a market share of approximately 6.9%(1)
and assets totaling QR100.8bn
• Doha Bank has a strong domestic franchise with the 2nd largest retail footprint with 27 local branches, 7 e-branches including pay offices, 1 active mobile unit and around 100 ATMs as at 30th June 2019
• Doha Bank has one of the largest international networks of the Qatari banks through branches located in UAE (Dubai and Abu Dhabi), Kuwait and India (Mumbai, Chennai & Kochi) and representative offices in Singapore, Turkey, Japan, China, United Kingdom, South Korea, Germany, Australia, Hong Kong, Canada, South Africa, Bangladesh, Sri Lanka and Nepal
• Doha Bank, leveraging its network, has a strong market presence in contract financing (27% market share), trade loans (11% market share) and real estate (11% market share) and has been fast growing (7% net loans CAGR since 2009)
• The bank operates principally through four business groups: Wholesale Banking, Retail Banking, International Banking and Treasury & Investments
• Doha Bank’s long-term local and foreign currency rating was assessed at A3 / BBB+ / A / A by Moody’s, S&P, Fitch and Capital Intelligence respectively
20
21
1 Qatar2 Dubai - UAE3 Abu Dhabi - UAE4 Kuwait City - Kuwait5 Mumbai - India6 Kochi - India7 Chennai - India8 London - UK9 Frankfurt - Germany10 Istanbul - Turkey11 Singapore12 Shanghai - China13 Seoul - S. Korea14 Tokyo - Japan15 Hong Kong - China16 Sydney - Australia17 Toronto - Canada18 Johannesburg - South Africa19 Dhaka - Bangladesh20 Colombo - Sri Lanka 21 Kathmandu - Nepal
Qatar Holding LLC(a subsidiary of QIA)
16.7%
OtherShareholders
83.3%
Source: Company information, Doha Bank estimates based on public information and QCB dataNote: 1. Measured as a percentage of the aggregate assets of the banking sector in Qatar as at 30 June 2019
Second largestRetail footprint
Largest internationalnetwork of representative
offices among Qatari banks
Strong position in select business linesincluding contract financing, trade finance, real estate and retail
Strong international footprintKey highlights
Diversified shareholder base and strong support
Source: QCB banks’ monthly statements and annual reports
2
Banking sector
Loan market size (QRbn) and Doha Bank market share (%) Qatari banking system – Total Loans Vs Deposits (QRbn)
Total Deposit Total Loans
• A leading franchise in real estate, contract financing and trade
• Well diversified loan portfolio
• Worldwide network of representative offices in key locations
• Strong and prominent brand recognition in Qatar
• First to introduce many innovative products and services in Qatar
• Many of the Board members belong to the ruling ‘Al Thani’ family
Comments:- Market Share
Government loans
Total loans
Services*
Real estate loans
Retail loans
Trade loansContract financing
972
826
940
810
911
823
844
727
753
650
653
601
2014 2015 2016 2017 2018 Q2-19
Doha Bank market share as of 30 June 2019
* Includes Non-Banking Financial Institution
Loan market size as of 30 June 2019
1.3%
314
5.8%
176
11.3%
155
6.7%
956
6.3%
131
11.4%
125
27.4%
39
40
287
35
173
27
322
133
28
141
30
171
13
3
Qatar Economy
Source: 1. IMF World Economic Outlook Database (April 2019) 2. British Petroleum Statistical Review of World Energy (June 2019)
3. Qatar Economic Outlook December 2018 4. Qatar monthly statistics - Planning and Statistics Authority (July 2019)
Government fiscal surplus/deficit (% of GDP)Stable economic situation
Sovereign rating: AA- (Stable) by Fitch / AA- (Stable) by S&P / Aa3 (Stable) by Moody’s
Gas reserves:Qatar has the 3rd largest reserves of natural gas in the world(2)
Oil reserves: 25.2bn barrels of proven oil reserves(2)
Current account balance:Surplus of 4.6% in 2019(1) and 4.1% in 2020(1) of nominal GDP
Forecasted real GDP growth: 2.6% in 2019(1) and 3.2% in 2020(1)
Population: 2.64 million as at 30 June 2019(4)
GDP per capita:With US$70,288 in 2019 Qatar is one of the wealthiest countries in the world(1)
Government fiscal position: Estimated surplus of 5.1% of GDP in 2019(3)
Government gross debt: QR371.5bn (52.7% of GDP) in 2019(1)
Significant future government & infrastructure spending:
Significant investments in the run up to hosting the 2022 FIFA World Cup and achieving the 2030 Qatar National Vision (e.g. gas projects, airport, rail, infrastructure, housing)
Currency: Pegged to the U.S. dollar since 1980
Qatar enjoys one of the highest GDP per capita at US$ 70,288 in 2019(1) and has a strong historic economic growth
2014/15 2015 2016 2017 2018 2019
15.0%
5.0%
-5.0%
-15.0%
-6.6%
Source: QCB annual reports & QCB Quarterly Statistic BulletinsNote: The above data until 2014/15 is for the fiscal year from 1 April – 31 March
Government revenues (QRbn)
Oil & Gas revenues** Miscellaneous Transferables revenues WTI Crude Oil Price ($/brl)
Source: Government revenues: QCB annual reports & WTI Crude oil Price: Bloomberg report - June 2019Note: * Preliminary data covers 9 months (1/4- 31/12/2015) where the period has been extended as
per Law No. (2) for the year 2015 for amending the fiscal year to a calendar year. ** Oil & Gas Revenue includes investment revenue transferred from Qatar Petroleum.
14.5%
-9.2%
-0.7%
5.1%2.2%
13/14 14/2015 2015* 2016 2017 2018
400
300
200
100
0
250
200
150
100
50
0
4.6%
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Qatar Economy
Upcoming projects and economic development have attracted an influx of expatriate labor and benefited the economy
Mining and Quarrying Real EstateWholesale, Retail and other servicesManufacturing Public administrationTransportation and storageConstruction OthersFinancial and insurance activities
Infrastructure projects in Qatar
2022 FIFA World Cup
• ASHGHAL - Expressway Programme (2021)
• FIFA World Cup Football Stadiums (2020)
• UDC - Pearl Qatar (2022)
• Msheireb Properties - Msheireb Downtown Doha (2020)
• QP - Bul Hanine Field Redevelopment Project (2021)
• LREDC - Lusail Development (2025)
• ASHGHAL - Local Roads & Drainage Program (2022)
• QatarGas - Barzan Gas Development (2023)
• NPP - Hamad Port (2025)
• Barwa Real Estate - Barwa Al Khor Development (2025)
• QFZA - Qatar Economic Zone (2025)
• QRAIL - Qatar Integrated Rail Project (2026)
• Kahramaa - Water Security Mega Reservoirs (2036)
• Kahramaa - Qatar Transmission (2020)
• Qatargas - North Field Gas Expansion (2022)
• ‘2022 FIFA World Cup’ is expected to draw around half a million visitors, circa 19% of Qatar’s current population
3rd largest reserves and 2nd largest exporter of natural gas
Development of GDP composition 2014–2018*
Natural gas reserves (2018) Export of natural gas in 2018 (cubic meters bn)
2014 2018*
Others29.6%
UAE3.0%
Saudi Arabia3.0%
Turkmenistan9.9%
US6.0%
Qatar12.5%
Iran16.2%
Russia19.8%
#3
250
200
150
100
50
0
248
125 121
77
32
Russia Qatar Norway Canada Netherlands
#2
Infrastructure projects & events to benefit from theNational Vision 2030
Source: British Petroleum Statistical Review of World Energy (June 2019)
Source: Business Monitor International, research reports
52.5%
6.3% 8.5%
6.8%
6.0%
7.4%
4.0%
7.0%
15.0%9.2%
36.1%
5.4%
10.1%
6.7%
6.4%
2.1%5.9%
Source: QCB Quarterly Statistical Bulletin – March 2019Note: * Preliminary estimates
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Financial Summary
Ratios Capital
Profitability Assets and Liabilities
Q2 2019 Q2 2018 YoY
Interest income 2,060,872 1,953,993 5.5%
Interest Expense 1,098,979 871,710 26.1%
Fees and commission 203,624 192,927 5.5%
Other Income 152,074 84,710 79.5%
Staff Cost 238,155 261,031 -8.8%
Non Staff Cost 220,147 238,294 -7.6%
Provision 344,266 391,460 -12.1%
Net Profit 518,591 470,701 10.2%
Q2 2019 Q4 2018 Q2 2018 YTD YoY
Total Assets 100,794 96,132 89,150 4.8% 13.1%
Loans and Advances 60,917 59,844 57,952 1.8% 5.1%
Investments 25,452 20,727 19,927 22.8% 27.7%
Customer Deposits 55,617 55,785 51,880 -0.3% 7.2%
Total Equity 13,258 12,733 12,543 4.1% 5.7%
Q2 2019 Q2 2018
ROAE (%) 9.1% 7.7%
ROAA (%) 1.05% 1.03%
NIM (%) 2.00% 2.42%
CTIR (%) 35.5% 36.6%
Q2 2019 Q4 2018 Q2 2018
RWA 76,915 77,173 76,840
CET 1 Ratio (%) 11.1% 10.7% 10.3%
T1 Ratio (%) 16.2% 15.8% 15.5%
Total Capital Ratio (%) 17.4% 17.0% 16.6%
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Corporate banking
• A significant contributor to the total income of Doha Bank
• Evolved to be one of the core competencies of the bank and will be one of the major growth areas of the Bank
• Targets local and international companies
• Well diversified portfolio focused on private sector
Comments:
Real estate
Trade
Contract financing
Services
Loans (QRbn)Overview of the corporate banking loan book - June 2019
Source: Company information
Non-bankingfinancial institutions
2.9%
Services 16.1%
Trade 26.5%
Contracting 19.6%
Real estate 32.6%
Others 1%
Industry 1.3%
9.8 8.411.6 10.1
14.510.7
18.3
11.0
18.5
10.5
17.5
10.5
2014 2015 2016 2017 2018 Q2-19
CAGR (2014 – Q2-19) : 14%
8.8 9.4 9.711.6
13.414.3
2014 2015 2016 2017 2018 Q2-19
CAGR (2014 – Q2-19) : 11%
2014 2015 2016 2017 2018 Q2-19
CAGR (2014 – Q2-19) : 5%
3.3
6.16.8
6.4
8.7
7.3
2014 2015 2016 2017 2018 Q2-19
CAGR (2014 – Q2-19) : 24%
Source: Company information
Total : QR53.9bn
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Real Estate
Qatari market real estate loans (QRbn)Real estate market share development
Source: Company information and QCB data Source: QCB banks’ monthly statements and annual reports
11.3%
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
% of total June 2019 loans portfolio
40.451.0
76.285.6 85.4
95.7
125.7135.0
151.5154.6
147.3
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2-19
CAGR (2009 - Q2-19) : 15%
• Conservative regulatory environment with real estate lending limits well defined
• Loan portfolio is highly collateralized at circa 170%
Comments:
27%
Market Share
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Contract Finance
Qatari market contract financing loans (QRbn)Contract financing market share development
Source: Company information and QCB data Source: QCB banks’ monthly statements and annual reports
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
13.0
18.416.2 18.2
23.3
32.0
38.937.0 38.5
40.5 40.1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2-19
CAGR (2009 - Q2-19) : 12%
• Doha Bank’s high market share benefits from strong relations with key contractors through Doha Bank representative offices (eg. Turkey, South Korea, Japan, Germany)
• Doha bank is looking to reduce its market share in this segment
Comments:
• The Qatari contract financing sector growth has been declining in recent years
• The contract financing sector is set to benefit from planned infrastructure spending in Qatar as well as the ‘2022 FIFA World Cup’
Comments:
27.4%
16%
Market Share % of total June 2019 loans portfolio
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Chennai2018
Kathmandu2018
Colombo2018
International Presence
Increasing international reach
International asset evolution (QRbn)Timeline of international expansion
Source: Company information
Source: Company information
Source: Company information
• 2005: Doha Bank established a representative office in Dubai
• 2006: Representative offices in Singapore and Turkey commenced operations
• 2007: First full branch outside of Qatar – in Dubai (upgraded from a representative office to a branch). Representative offices were established in Japan and China
• 2008: Kuwait branch was established. Representative offices in the United Kingdom and South Korea were established
• 2011: Representative offices were established in Abu Dhabi and Germany
• 2012: A representative office was opened in Australia. Abu Dhabi representative office was upgraded to a full branch
• 2013: Representative offices were established in Hong Kong & Canada
• 2014: Opened a branch in Mumbai, India and first e-branch in Dubai
• 2015: Acquired 2 new branches in India (Mumbai & Kochi) from HSBC Oman and a representative office opened in South Africa
• 2016: Representative office was established in Bangladesh
• 2018: Commencement of Chennai Branch. Representative Office established in Sri Lanka and Nepal
14.216.0 16.5
14.8
11.911.6
2014 2015 2016 2017 2018 Q2-19
12% of total assets
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Leading and innovative retail franchise
Source: Company information
• Expansion of digital customer service through WhatsApp, Hello Doha and FB messenger
• Doha Sooq—Ecommerce platform• Digital loan on-boarding• Whatsapp Chat service• Biometric authentication in Mobile
Banking• Apple iWatch Banking Application and
Innovative range of retail products Distribution channels: Innovative and increasing efficiency
Strong reputation for new and innovative products and strong brand quality
Second largest conventional retail footprint in Qatar
Transactional / Deposit accounts
• Doha Bank offers a wide range of accounts to its customers, including term deposit accounts, call accounts, payroll accounts and various accounts of different maturities & yields
• Doha Bank Offers New Debit Cards with contactless, secure online payment capability along with Doha Miles
• Doha Bank also offers special products for salary transfers
Loans • Personal and Vehicle loan products are available to customers, who transfer their salaries to the bank, for up to six years (Qataris) and four years (Expatriates)
• Mortgage loans are tailored to suit individual needs with competitive interest rates. Available for eligible customers in Qatar and other selected markets
Expatriate banking
• The division is focused on Qatar, UAE, Kuwait and India and offers cross-border remittances, wealth management and off-shore banking services
Credit cards • The Bank Offers an extensive range of credit cards including Contactless Cards
Private banking
• Offer privileged services such as Home Service, Real Estate Advisory, Global emergency cash access services, brokerage services
• Products include capital protected close-ended investments, Visa Infinite Credit Card, Mortgage Lending in UK and Kuwait, leveraging on local tie-ups
Branches • Second largest retail footprint in Qatar widespread throughout the country
• Full service branches in Abu Dhabi, Dubai, Kuwait and India
ATMs • Network of around 100 ATMs throughout the country• The Bank has many ATMs with multi functional capabilities
Internet banking
• Doha Bank has the award winning first bilingual website in Arabic and English amongst the banks in Qatar
• Doha Bank has launched the New online portal for customers with enhanced features including E- Statements and Activation of Credit & Debit Cards through Online & Mobile Banking
E-shopping portal
• Doha Sooq (e - commerce website) - first ‘online shopping mall’ offered by a Qatari bank
Mobile banking
• Grants access to bank account details and enables instant transfer of funds, paying registered utility and credit card bills, recharging pre-paid mobile or internet services and viewing current exchange rates along with in-app notifications
Conventional Bank Islamic Bank
61
QNB* Doha Bank* QIB Rayan Ahli
34 3018 14
Source: Annual Reports from respective Banks’ WebsitesNote: * Includes E-Branches & Pay offices
Doha Bank was the first to introduce many products & services in Qatar such as:
#2
CBQ
29
Tablet Banking• Al Dana Savings Scheme• Co-branded credit cards and travel
cards• Gold bar sales• Green Banking (including ‘Green
Mortgage’ Home Loan Product and Green Car Loan)
• Qatar Exchange Traded Fund (QETF)
1.00%
0.33%
1.52% 1.41%1.59%
0.81%
1.38%
593
50120
417448
630
952
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Credit Quality
Total Reserves* for loans & advances divided by impaired loansNPL evolution
Net impairment loss on loans and cost of risk*
3.61%3.99%
4.30%
5.06%5.84% 5.78% 5.83%
2,2592,560 2,684
3,236
3,802 3,6813,856
2017 Q1-18 Q2-18 Q3-18 2018 Q1-19 Q2-19 2017 Q1-18 Q2-18 Q3-18 2018 Q1-19 Q2-19
2017 Q1-18 Q2-18 Q3-18 2018 Q1-19 Q2-19
NPL (QRmn) NPL %
Net Impairment loss on loans (QRms) Cost of Risk %
Total Reserves for loans & advances Total Reserves for loans & advances/impaired loans
Source: Company information
Source: Company information
Source: Company information
186% 169% 171%150%
138%137% 136%
4,190 4,323 4,5784,846 5,233 5,048 5,263
* Includes expected credit losses for 2018 and 2019 (Note: 2017 includes risk reserves)
* Includes expected credit losses (ECL) as per IFRS 9 for 2018 and 2019
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Credit quality in Doha Bank‘s core businesses and by geography
Corporate NPL ratio Contracting NPL ratioReal estate NPL ratio Retail NPL ratio
NPL per geographical location - June 2019
Qatar GCC India
2.4% 2.5%
33.1%
Consolidated
5.8%
Source: Company information
2016 2017 2018 Q2-19 2016 2017 2018 Q2-19 2016 2017 2018 Q2-19 2016 2017 2018 Q2-19
• Real estate NPL% is almost nil
• GCC branches showing significantly high NPL%
• Corporate and Contracting NPL% increase mainly attributable to exposure from GCC branches
• Qatar operation’s NPL% remains low
Comments:
0.1% 0.1% 0.2%0.2%
4.2%4.6%
7.7%7.3%
3.8%
4.7%
5.2%4.8%
6.8%7.9%
13.3%
15.9%
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High margin and high dividend yield
Cash dividend (QR per share)Net interest margin %
Attractive dividend yield
Source: Company information
Source: Company information & Bank’s Annual Financial Statements
4.5
4.0
3.0 3.0
1.0
2013 2014 2015 2016 2017 2018
Source: Company information
2011 2012 2013 2014 2015 2016 2017 2018
• High Net Interest Margin amongst competitors
• Historically high dividend yield as compared to competitors
• 2018 Dividend reduced in order to enhance capital ratios
Comments:
7.0%
7.1%
2.6%
4.6% 4.1%
2.2% 3.5%
1.8%
2.8%
3.1%
8.5%
5.1% 7.7%
0.0%
3.8% 3.5%
2.8%
9.0%
7.8% 7.0%
8.4% 8.7%
4.5%
10.5%
Doha Bank QNB CBQ
3.0
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2.50% 2.44% 2.41% 2.37% 2.24% 2.09% 2.00%
2017 Q1-18 Q2-18 Q3-18 2018 Q1-19 Q2-19
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Diversified loans and deposits
Source: Company information
• Doha Bank has maintained a very well diversified loan mix
• Doha Bank consistently ensures it retains a diversified deposit and funding base to minimize concentration risks
• Qatar Central Bank (QCB) imposes certain credit concentration limits on regulated banks in Qatar and the Bank follows QCB’s credit concentration policy
• Those credit concentration limits impose restrictions such as single obligor limits as well as restrictions on real estate lending
Comments:
By sector – June 2019 By type – June 2019
Loans LoansDeposits Deposits
Total loans: QR60.9bn Total loans: QR60.9bnTotal deposits: QR55.6bn Total deposits: QR55.6bn
Industry 1.0%
Services 13.1%
Individuals 21.4%
Trade21.5%
Contract Financing 15.9%
Retail 12.4%
Non-banking financial institutions
2.3%
Government and related agencies
6.2% Government and related agencies
39.2%
Retail 12.4%
Corporate 81.4%
Government and related agencies
6.2%
Current and Call Deposits 20.2%
Term Deposits 75.6%
Savings Accounts 4.2%
Real estate 26.5%
Others 1.1%
Non-banking financial institutions
2.4%
Corporate 37.0%
15
Investment Book
Investment portfolio – split by type – June 2019 (%)Portfolio overview
Investment portfolio (QRmn)
• Conservative investment philosophy -Low hard limits for discretionary trading / investments
• Majority of portfolio in local sovereign fixed income
• State of Qatar portfolio repo-able with central bank to the extent liquidity is needed
• Conservative investments limits linked to Tier 1 capital as per QCB
• Investment portfolios are re-classified and re-measured post adoption of IFRS 9 with effect from 1 January 2018
9,856
12,198
14,706
17,513
25,452
20,727
2014 2015 2016 2017 2018 Q2-19
Source: Figures are sourced from Annual Reports and Quarterly Financials
Total (QR25,452mn)
Other debtsecurities21.4%
State of Qatar debt securities
76.0%
Mutual funds 0.3%Equities
2.3%
FVOCI (QR17,952mn) Amortised Cost (QR7,390mn)
Other debtsecurities24.8%
Other debtsecurities13.3%
State of Qatar debt securities
72.0%
State of Qatar debt securities
86.7%
Equities3.2%
Total liabilities and equity: QR100.8bn
Other borrowings 7.0%
Customer deposits 55.2%
Other liabilities4.0%
Due to banks 13.2%
Equity 20.0%
16
Liquidity and Capitalization
Evolution of tier 1 and capital adequacy ratioFunding mix – June 2019
Loan to Deposit ratio (%) - June - 2019
Source: Company information
Source: Company information
14.7%15.4%
16.2%15.8%15.4%
17.4%
11.8%10.4% 11.1%10.7%10.4%
12.3%
2014 2015 2016 2017 2018 Q2-19
15.0% 15.7% 15.6% 17.4%17.0%17.5%
Tier 1 ratio CET 1 ratio % Total CAR
Source: Company informationNote: 2014 onwards based on Basel III
109.5%117.7%
98.3%99.4%110.3%
105.6%116.1%
DB System Rayan CBQ Ahli QIB QNB
• Doha Bank has a diverse funding profile including a mixture of retail, wholesale, interbank, long term liabilities and shareholder funds
• The bank maintains holdings of QR19.3bn of State of Qatar bonds
• 2018 capital adequacy ratios are post opening ECL adjustment
Comments:
Debt securities 0.6%
17
Doha Bank strategy – Clear path to future growth
Source: Company information
• Maintain conservative and cautious approach to underwriting in particular with regards to contracting sector
• Continue improvement in risk management procedures and systems
• Doha Bank intends to further continue its targeted international expansion strategy
• Expand and further leverage the trade finance business through the network of representative offices, by further developing relations with companies doing business with countries where we have our presence
• Leverage on strong existing distribution channels to expand loan book, generate more revenues and improve efficiency
• Identify areas of potential operational and cost efficiency improvements
• Leverage on latest digital technologies to increase operational efficiency
• Further develop existing operations and position Doha Bank at the center of the infrastructure growth in the economies where we operate
• Doha Bank is positioned to capture the upcoming infrastructure growth in Qatar
Improvecredit quality
Furtherimprove
efficiency
Continue targeted international
expansion
Furtherconsolidate Qatari
position
Further develop International
branch network
18
Concluding remarks
Source: Company informationNote: 1. Ranked by assets, excluding Islamic banks
2. 2009 – Q2-19 CAGR of Doha Bank’s total assets
Strong regulatoryenvironment aligned
with internationalbanking standards
Backdrop of a strong macro-economic
environment
Proactive and supportive sovereign
Strong Bond Recognition
Strong investment grade credit ratings
Stable liquidity
Strong shareholder base
3rd largest conventional Qatari bank (1) with 2nd
largest retail footprint in Qatar
Highly experienced management team
Prime player in Qatari banking market,
growing at c.7% pa (2)
www.dohabank.com