QFB announces first quarter results

• 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.”

QFB announces the resignation of Ziad Makkawi as its Chief Executive Officer, The board of directors also announces the appointment of Khaled Al Khoori as new Acting CEO

The Board of Directors of QFB LLC (Public) announced today the appointment of Mr. Khaled Abdullah Al Khoori, as the new Acting CEO pending regulatory approvals. The Board of Directors of QFB has approved the resignation of Chief Executive Officer Mr. Ziad Makkawi during his last meeting, and thanked him for his efforts during the previous period and wished him success in his future plans.

Al Khoori took the helm of Al Hilal Bank in December 2015 following his appointment as CEO. As the head of one of the fastest-growing Islamic banks in the UAE, Al Khoori brought to the bank his extensive years of valuable professional experience in the Banking and Investments industry to help steer the organization’s future direction and growth. Prior to joining Al Hilal Bank, Al Khoori played numerous key roles at the Abu Dhabi Investment Authority (ADIA), as he was the Director of Real Estate and Infrastructure Department, managing the firm’s strategic global relationships and investment.

In addition, Al Khoori was the Director of the Private Equity Department for three years, where he focused primarily on US/Europe mega funds, buyout funds, Secondary Market investment in PE, Distressed Credit Investments during the Global Financial Crisis. Al Khoori served as Vice Chairman of Abu Dhabi Islamic Bank (ADIB), Chairman of National Takaful Company (Watania), and founding board member of QFB. Khaled graduated Summa Cum Laude from Boston University, US, where he earned his Bachelor of Science in Business Administration (BSBA). He also completed a General Manager Program (TGMP) from Harvard Business School in 2005.

Abdulla Bin Fahad Bin Ghorab Al Marri, QFB’s Chairman, said:

“We would like to welcome Khaled Abdullah Khoori as the Acting CEO of QFB, and roll out the strategy of establishing a leading Shari’ah Compliant Bank. Together, we will continue to build on our successes in the Private Equity area and broaden the services we offer to our clients and shareholders. We are excited about having Khaled as an Acting CEO, especially after knowing him as one of the bank’s board members. Khaled brings a depth of experience and we are confident that he will lead the team and grow the Bank to new heights, God willing”.

Mr. Al Marri added:

“We would like to thank Mr. Ziad Makkawi for his contribution and his achievements to the Bank. We wish him continued progress and prosperity, and success in his future endeavors. ”

Under Makkawi’s leadership as the bank’s CEO since June 2015, QFB witnessed strategic achievements marked by the launch of the new strategy that streamlined the business to offer Shari’ah compliant services including alternative investments with a focus on Private Equity and Real Estate, as well as Corporate & Institutional banking, Private Banking & Wealth Management, Treasury & Investments. During his tenure, Makkawi led several milestones for the bank most significant of which was listing the bank’s shares on the Qatar Stock exchange. In addition he oversaw the establishment of an open architecture platform for Private Banking services and transformed the organization from an inward focused investment house to a client focused financial institution. The bank also launched several innovative structures and products catering to its high net worth and institutional client base.

Qatar First Bank held AGM

Qatar First Bank L.L.C. (Public) “QFB” held its Annual General Meeting (AGM) yesterday to discuss the bank’s results and future outlook after releasing financials for the year ended 31 December 2016 and announcing the launch of the second phase of the cost rationalisation plan.

QFB’s Board of Directors, chaired by QFB chairman Abdulla Bin Fahad Bin Ghorab Al Marri, along with shareholders and attendees of the AGM, discussed and approved, the bank’s audited financial results and the performance of the eight full year of operation, and QFB first year as a listed entity on the Qatar Stock Exchange (QSE). The AGM was held at the Le Crillon Ballroom at La Cigale Hotel in Doha – Qatar,

Abdulla Bin Fahad Bin Ghorab Al Marri, QFB’s Chairman, said:

“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. Closer to home, the geo-political unrest continues to hamper the growth of the MENA economies. Qatar, despite being one of the best performing economies in the GCC, has faced several challenges.”

“At QFB we were not immune to the prevailing global economic scene. We have recorded losses, the majority of which are unrealized, resulting mainly from the downward revision of the valuations of some of our private equity investments across several markets.” Al Marri added

Despite the write-down of QFB’s investment book, the bank’s total assets didn’t decline and closed at almost QAR 6 billion, mainly driven by the increase from financing assets, which increased by 33%. Moreover, the investment portfolio continued to generate healthy dividends (QAR 13 million). QFB’s Sukuk book continued to generate positive returns close to QAR 30 million. Last but not least, the bank’s income from placement with financial institutions has tripled mainly from cash deployment in Shari’ah compliant money market funds.

As the global investment market continues to go through major challenges since the beginning of 2016, QFB’s private equity portfolio has been negatively impacted by country-specific events mainly in Turkey and the UK. The decrease in the valuation of the bank’s investments reflects the effect of the macroeconomic and extraordinary factors that both countries have been facing. The main impact came from the depreciation of currency, Turkish Lira and British Pound Sterling, against the US Dollar and from the weakness of the real estate sector in the United Kingdom.

QFB’s private equity portfolio had consistently generated significant returns over the last 6 years. The bank’s Turkish investments are still 47% higher than their acquisition price and will continue to grow in sales and profitability and occupy leading positions in their respective industries of Healthcare and Retail. Additionally, QFB’s UK investments are still significantly above their acquisition costs, both in Pounds and Riyals.

Whilst the current volatility in the global markets has impacted the bank’s business, QFB continued to successfully manage its existing portfolio, as well as seeking out new lucrative opportunities. The management hopes that the portfolio will perform well in the years to come.

In line with QFB’s strategy, the bank will continue to seek exits on its existing investment portfolio book with the objective of maximizing value to shareholders and clients at opportune times; and to reinvest the proceeds in lucrative opportunities that will contribute positively to the bank’s returns.

Al Marri continued:

The major challenges in the global investment market and the downward revision of our private equity investments have resulted in clearly disappointing results. Aside from these results, we continued urging the executive management to execute our strategy and focus on the most lucrative areas. Our aim was to fully match the evolution of the wider region’s investment direction, as well as continue to act as the gateway for investors, while building on our successes in the private equity area.”

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 1.53 billion (31 December 2016). Over the years, the team has successfully exited six investments, in addition to three partial exits, and generated healthy returns to Shareholders with an average IRR of 36%.

Commenting at the AGM, Ziad Makkawi, QFB’s CEO, said:

“2016 witnessed several key economic events, marked by economic volatility and challenges across our target markets, which caused us to record losses, resulting mainly from the downward revision of fair value gains recorded in previous years.”

Makkawi continued:

“Our strategy, going forward, focuses on our 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. QFB will continue to diversify our portfolio, tapping into new and attractive geographical markets. The bank is well positioned to provide capital solutions to growing businesses in the region, utilizing our expertise and network. We look to partner with market leaders, private and institutional investors, attracting third party money with the objective to create value while following international best practice and the highest levels of corporate governance.”

QFB aims to continue building its distribution and placement capability. Investment opportunities and financial solutions are personalized to the goals and risk profile of 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.

Alongside the distribution and placement capability, QFB will continue working with its strategic shareholders and clients, enabling the bank’s team to benefit from the wider network and from access to regional and international markets.

In line with the results, QFB’s management confirms the launch of the second phase of its cost rationalisation plan, originally launched in June 2016. The objective is to continue raising efficiency levels through strict and tight cost cutting measures including strategic reduction to the workforce caused by the consolidation of the placement and distribution capabilities of the bank’s corporate and private banking business lines; which going forward will focus more on fee generating services. The aim is to focus on capitalizing on the bank’s human resources and maximizing their experience to boost performance during 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.

Makkawi concluded:

“2016 was a difficult and challenging year for QFB and our shareholders. However, the changes instituted are the necessary first 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 alternative investments. In particular, the combination of 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 for the bank.”

Since the beginning of 2016, QFB has been witnessing strategic achievements marked by listing the bank’s shares on the Qatar Stock exchange, following the approval of the Qatar Financial Markets Authority (QFMA). Following this significant milestone, QFB has leveraged on the in-house and international breadth of investment solutions and structuring capabilities to offer an attractive range of products and services. The bank announced the placement of the ‘Ijarah Aviation Structured Product’ that was met with great enthusiasm by individual and institutional clients. Additionally, the bank’s team of professionals catered clients with a wide range of investment opportunities and innovative financial solutions to grow, manage and protect their wealth and assets. Besides, QFB, after the completion of its second residential project in London, announced offering specialised real estate services to individuals and corporates seeking to add value to their portfolios by owning, occupying and investing in real estate across the world. Last but not least, the bank continued to focus on liquidity optimization through the interbank market and money markets. Also, the team was actively involved in investing and managing the Sukuk book which continued to perform well and growing its private equity deal pipeline.

 

Al Marri concluded:

“Looking ahead we envision that the global economic backdrop will remain challenging specifically as the GCC region adjusts to low oil prices and slowing economic growth. In spite of these challenges QFB 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.”

Al Marri concluded by expressing his sincere appreciation for the visionary leadership of His Highness, the Emir, Sheikh Tamim Bin Hamad Al Thani. He continued by thanking the bank’s shareholders for their patience and loyalty, employees and business partners for their faith and support, and respected Shari’ah Supervisory Board for their wise counsel and guidance.