What were the highlights of 2011 for Mashreq Bank in Qatar?
KITSON: In 2011 we had quite an eventful year. It was certainly a very challenging banking environment globally, and also in Qatar as well. Some of the highlights for us were achieving the nomination for the Best Internet Bank in Qatar, which is a prestigious award that is provided to banks that provide the best online service to clients in retail banking. In addition to that, we have successfully launched our wealth management proposition. So we’re able to provide our clients in Qatar with a suite of products allowing them to improve the yields or the returns on their investments.
How competitive is the Qatari banking sector? What are the biggest growth segments?
KITSON: The banking sector in Qatar is fairly competitive. We have 16 conventional banks on the ground and an additional 4 Islamic banks on the ground. For a population of 1.7m people, that’s going to be fairly intensive. In terms of product offerings and competition for new entrants into the market, it’s going to be fairly high. For each new arrival into Doha, we tend to be very actively looking to get those individuals to bank with us. So it is competitive. It’s competitive from a retail banking perspective because there are so few people here and also because the commercial sector is fairly narrow as well. It’s growing as the small business sector grows, but it’s still fairly small.
The sectors in Qatar, commercially, that we believe are going to grow quite aggressively over the next 3-5 years is the contract finance area, which is those companies who are coming here to get involved with road construction and building construction. We have some massive projects that are coming online here relatively soon. We have the metro and fast international rail links that are due to be planned over the next 10 years. We also have Lusail City, which is just starting to break ground. So you can imagine that the focus on international contractors and regional contractors will be on this market. Mashreq Qatar is certainly gearing up to cater for the needs of those international and regional contractors.
What part are local and regional banks going to play in financing these construction projects relative to global banking players?
KITSON: I think there’s a good mix. I think many of the international players that come in, and I’m talking about the international contractors that come into Qatar, they have existing relationships. Perhaps they’ll have an existing relationship with a US based bank. So they’ll have a relationship, however, because the contracts are so large, very often they’ll need to diversify their banks. One international contractor might have 3 or 4 banks that he uses to provide the financing that allows him to complete a project.
How has the international financial crisis changed the dynamic between local and international banks in terms of project finance?
KITSON: The international banking crisis that has been ongoing since 2008, which seems to have, hopefully, taken on a slightly more positive light in 2012, we have seen impacts from the fact that a number of the international banks that used to be fairly dominant here have been less active. They've been unable to fund projects because they've had balance sheet constraints due to holding they might have of a different asset class. We’ve found, generally, that the global players, the global banks, that were previously - 3, 4, 5 years ago - extremely active in the market, have been less so. That’s given the regional banks and the local banks more of an ability to provide banking services and to grow their book locally.
How would you describe the state of the SME segment in Qatar? How is Mashreq Bank working to expand its presence in the SME segment?
KITSON: The SME market here is still fairly immature. The market is particularly small because the population in Qatar is also fairly small compared to other GCC countries. So the market is not as trade finance focused as you’d see in, for example, the UAE, which has a more developed trading hub culture and environment. Qatar is trying to actively develop the SME sector. Certain exciting sectors that we’re seeing at the moment are manufacturing; we’re seeing a number of small business manufacturers that are connected to the oil and gas sector that, for example, manufacture plastic pipes. Obviously that’s an off-take from the oil and gas that we have here. In addition, we have fertilizer plants and treatment plants that can sell overseas, can export, and can diversify the economy.
Mashreq Bank in Qatar is always looking to expand. Specifically in 2012, we have plans to further develop our small and medium business lending. This is in partnership with the government and the Qatar Development Bank. The government is generally trying to diversify income streams away from the oil and gas sector and the SME sector is one of the core business focuses that we have and we’re planning to improve the way we operate in that particular market.
We’ve found, generally, that the global players, the global banks, that were previously - 3, 4, 5 years ago - extremely active in the market, have been less so. That’s given the regional banks and the local banks more of an ability to provide banking services and to grow their book locally.
What role is the Qatar Central Bank playing in guiding the banking sector?
KITSON: I think we’re seeing a more active role by the Central Bank. It’s taking on a more leadership role and we’re seeing some very positive developments such as the ability for banks now to access common credit information on customers that need to borrow, be it retail or wholesale customers. So we’re seeing the Central Bank taking a more leadership role and guiding us in a conservative manner so that the banking sector in Qatar can grow.
What impact has the Qatar Central Bank’s directive to completely separate Islamic and conventional banking had on the sector?
KITSON: Obviously the conventional banks that have had to float away or disperse their Islamic banking operations, it must have been fairly painful. Mashreq Bank in Qatar has never offered Islamic banking, we’re a conventional bank. So for the commercial banks, it’s going to mean that, possibly, their operations here might slightly contract. However, on the flip side, you’re going to see the 4 Islamic banks that we have here expanding their scope of operation. I believe that a number of conventional banks here have been actively dispersing their client base to the Islamic banks so that they can be catered for. So you will see the sectors splitting away slightly because the needs are very different. But overall, it’s a very positive move for Qatar. If you have Islamic banking requirements, from a standpoint of being pure Islamic bank, it’s probably best that you’re just going with that bank and not having your funds cross referenced to a conventional source.
What is your general economic outlook for Qatar in 2012?
KITSON: The general economic outlook for Qatar in 2012 is strong. We have positive indications on the large projects such as the metro and large road projects plus Lusail, which is going to be a massive city to the north of Qatar. So the outlook for government led projects is very strong. However, one caveat is that we’re seeing, still in 2012, a fairly narrow commercial sector that’s not related to government projects. Demand in the non-government project sectors is still fairly limited and a number of the local companies here remain in a position where they’d look to see an uptick in business.