• Recorded revenue of QAR 121.5 million;
• Slightly decreased total assets by 3% to QAR 5.8 billion, compared to year end 2016
• Compared to the same period of the previous year, QFB:
o Improved profitability by 51%; and
o Reduced expenses by 13%
Qatar First Bank L.L.C. (Public), a leading Shari’ah compliant bank based in Qatar and listed on the Qatar Stock Exchange (QSE), has released its financial results for the first quarter of 2017 recording revenues of QAR 121.5 million and improved profitability by 51%.
Mr. Khaled Abdullah Al Khoori, Acting Chief Executive Officer, QFB said:
“As the global investment market continues to go through major challenges, QFB was able to record revenues of QAR 121.5 million and improved profitability by 51% from a loss of QAR 19.6 million (during the first quarter of 2016) to a loss of QAR 9.6 million (for the same period this year). We envision that the global economic backdrop will remain challenging for the remainder of this year; however, we will continue to push ahead to develop innovative financial solutions and source attractive investment opportunities for our individual and institutional clients.”
Since the beginning of 2017, QFB has been witnessing solid achievements marked by the development of the placement and distribution force that will focus on offering personalized investment opportunities and financial solutions to both individual and corporate clients. To support this initiative, the bank has signed several agreements with internationally recognized players expanding the range of offerings to meet the changing needs of clients across several markets.
Al Khoori added: “The year 2016 saw several key economic events that contributed to the stagnation of the global economy. The depreciation of major currencies, the plunge in oil prices, and the many country-specific macroeconomic and extraordinary factors; have all furthered the slowdown of the global economy. At QFB we were not immune to the prevailing global economic scene.”
Despite these challenging economic factors that continue to have influence on the bank’s investment book, QFB total assets slightly decreased by 3% from the year end 2016, and closed at QAR 5.8 billion. Moreover, the investment portfolio continued to generate healthy dividends recording an increase of 14% compared to the first quarter of 2016. QFB’s Sukuk book also continued to generate positive returns resulted in an increase of 14% compared the same period of 2016. Furthermore, the bank’s income from placement with financial institutions has increased by 46%, compared to the first quarter of the previous year, mainly from cash deployment in Shari’ah compliant money market funds. Additionally, the bank’s income from financing assets increased by 42%, compared to the same period of 2016, recording additional income of QAR 6 million.
On the private equity front, QFB’s investments in the healthcare sector has shown positive momentum during the first quarter of 2017. With regards to Memorial Healthcare Group, one of Turkey’s largest premier hospital chain, healthy growth has been achieved on both the revenue and EBITDA levels, both growing by 10% from the same period of the previous year, and benefiting from a relatively stable currency fluctuation. As for QFB’s investment in Cambridge Medical and Rehabilitation Center in the UAE, significant growth was achieved with revenue growing more than 40%, compared to the same period of the previous year, on the back of the repeal of the 20% co-payment mandate for inpatient Long Term Care in late January 2017, in addition to the continued expansion in services and locations, both locally and regionally. During the same quarter, the Bank sold the final two apartments on its development in Westbourne Grove, London.
QFB’s Turkish and UK investments, which were previously impacted by currency fluctuations and country-specific events, continued to be stable with slight improvements on the UK side. The team will continue to successfully manage the existing portfolio, as well as seeking out new lucrative opportunities. Besides, the management hopes that the portfolio will perform well in the years to come.
Al Khoori said: “In line with our strategy, QFB will continue to optimise the existing investment portfolio book with the objective of maximizing value to shareholders and clients; and to reinvest the proceeds in lucrative opportunities that will contribute positively to the bank’s returns.”
QFB’s current portfolio of alternative investments are within various sectors including healthcare, energy, consumer finance, real estate, industrial, retail, luxury, food & beverage; spread across diversified geographies. Since its incorporation, the bank has closed a number of successful transactions across Qatar, Turkey, the United Kingdom, Africa and the MENA region with carrying value of total equity investments (including subsidiaries) of QAR 1.49 billion (31 March 2017); decreased from the year end 2016 mainly due to successful exits during the first quarter of 2017. Over the years, the team has successfully exited seven investments in addition to two partial exits – the latest of which is selling 44% stake in one of the most successful leading healthcare platforms based in the UAE – and all together generated healthy returns to Shareholders with an average IRR of more than 30%.
On the treasury and investments front, the team continued to focus on the bank’s role as a trusted advisor, a gateway for investors who wish to tap into innovative, Shari’ah compliant, investment opportunities in local, regional and global markets. Leveraging the in-house and international breadth of investment solutions and structuring capabilities, presented by the successful placement of the Ijarah Aviation product, QFB will continue developing innovative Shari’ah compliant structured solutions that will meet individual and corporate clients’ needs.
Alongside the development of attractive products, the treasury and investments team continued to focus on liquidity optimization through the interbank market and money markets. Additionally, the team was actively involved in investing and managing the bank’s Sukuk book which continued to grow and perform well. The department will continue to grow and develop its capabilities with a concentration on developing in-house products during next year and offer attractive products linked to several sectors including Real Estate and Aviation.
On the placement and distribution front, the team will continue offering our range of personalised financial solutions and innovative investment opportunities focusing on profit generation and recurring income channels. During the first quarter of this year, the team has been able to maintain a growing portfolio through offering financing products and liability solutions including Wakala, Murabaha, Ijara, Istisna’a and others. Additionally, the team successfully added a new revenue stream by placing investment products with their corporate clients; demonstrating the synergies between departments – a hallmark to QFB’s strategy. Empowered by our client centric approach where the investment advice is personalized to the financial goals and risk profile of both individual and corporate clients, the placement and distribution team has signed several agreements with internationally recognized players expanding its range of offerings to cover financing, investments, trusts, foundations, advisory, real estate planning, and statement consolidation. The team has increased its booking business, expanded its services across major cities in the region, and solidified relationships with existing clients.
In line with the results and the changes instituted during 2017, QFB’s management continued raising efficiency levels through the implementation of the cost rationalisation plan that resulted in an overall reduction of expenses by 13% compared to the first quarter of 2016. The aim is to focus on capitalizing on the bank’s resources and maximizing the experience of the human capital to boost performance during 2017 and the coming years. Moreover, the efficiency action plan will enable accelerating the focus on business lines that are expected to generate income, and hence raise shareholders’ value and enhance profitability levels.
“2016 was a difficult and challenging year, and the first quarter of 2017 continued to be challenging. However, the changes instituted, in relation to strategy and efficiency, are the necessary steps in laying the foundations for a successful future. We recognize that there is still a considerable amount of work to be done, but we take comfort in the prospect of new business opportunities after refocusing our efforts on income generating business lines. In particular, the combination of our capabilities in private equity, real estate, and product structuring solutions; with dedicated origination and placement capacity; will create a business model that we hope to produce genuine growth and profitability.” Al Khoori added
Al Khoori concluded: “Looking ahead we envision that the global economic backdrop will remain challenging. In spite of these challenges we will continue adopting an opportunistic outlook to source viable investment opportunities that surface in such market conditions in order to generate sound returns for the Bank, our clients and shareholders.”