Qatar Islamic Bank: Setting the benchmark for Islamic banking

Starting out as the first Islamic financial institution in Qatar three decades ago, Qatar Islamic Bank has maintained a strong foothold in the market, and is set to continually take charge globally

 
 

The story of Qatar Islamic Bank (QIB), which spans three decades, is one synonymous with success. With a 36 percent share of Qatar’s Islamic banking market, QIB is now one of the leading Islamic financial institutions in the Gulf region and a benchmark against which many other banks measure themselves.

Breaking new ground
QIB operates under the supervision of a sharia board, which is made up of eminent sharia scholars. Though it concentrates purely on sharia banking, it has nevertheless captured a 10 percent share of the country’s overall banking sector – a share that continues to increase as more and more people come to understand the principles and advantages of Islamic banking.When QIB was established in 1982, it was the first Islamic financial institution in Qatar. Today – with a mission to provide innovative sharia-compliant financial solutions and quality services to its customers – the bank plays a leading role to maximise returns for its shareholders by adhering to the highest ethical principles, while meeting international banking standards.

Back in 1982 it was formed with a paid-up capital of QR25m. By 1996 that had increased to QR200m, climbing to QR 1.19bn a decade later, while today it has a paid-up capital of QR2.36bn. While there is a well-distributed network of 30 branches, there are also 145 ATMs and CDMs spread across the country, while further afield it boasts a strong network of correspondent banks, including leading international banks. QIB is currently expanding its wholesale banking and becoming the flagship Islamic bank for Qatari companies, while at the same time reengineering its operations and IT department to become a leaner, and more customer-driven service provider, serving its ever-expanding client base.

Sharing the success
As part of its overall strategy, QIB has invested heavily in its people, in order to become a preferred employer in Qatar and to ensure that it is able to attract and retain top talent. It has placed the development of a high performance culture within the organisation as a top priority, and a new objective based performance management system has been implemented and automated.

For the past 10 years, QIB has been expanding its overseas interests. For instance, in 2003 QIB established the Arab Finance House in Beirut – the first fully fledged Islamic bank – commercial and investment – in Lebanon. QIB’s stake is currently 37 percent. In 2007 the Asian Finance House was inaugurated in Malaysia, with QIB taking a 41.7 percent stake. The following year, QIB UK was established in London, with the bank taking a 70 percent share.

Qatar’s development in 1989 saw the establishment of Al Jazeera Finance, 30 percent owned by QIB. In 2009, Aqar was set up to operate in real estate investment and development, which is 49 percent owned by QIB. Another real-estate investment company, Bawabat Alshamal, was set up at the end of 2007, and that is 12.5 percent owned by QIB.

That same year, QInvest – created to attract investments in order to contribute towards financing large-scale projects – was licensed by the Qatar Financial Centre, and is 47 percent owned by QIB. BEEMA – the Damaan Islamic Insurance Company, was incorporated in September 2009 as a fully sharia-compliant private closed Qatari shareholding insurance company, with an authorised and paid-up capital of QR200m. QIB’s stake in BEEMA is 25 percent, and QIB was listed on the Qatar Stock Exchange in 1998.

[QIB] plays a leading role to maximise returns for its shareholders by adhering to the highest ethical principles, while meeting international banking standards

With its highly recognisable local, regional and international presence, QIB is now a frontrunner in the regional and international Islamic banking industry. Last August, Fitch Ratings awarded QIB’s Long-term Issuer Default Rating (IDR) at ‘A’ with a stable outlook and Viability Rating (VR) at ‘BBB’. Only three months prior to this, in May 2012, Standard and Poor’s (S&P) assigned its ‘A-’ long-term and ‘A-2’ short-term counterparty credit ratings to QIB, with a stable outlook rating on the long-term.

S&P hailed the bank’s business position – its leading position in the fast-growing Qatari Islamic banking segment and its business model and management – reflecting QIB’s sound financial position and business strategy. This was amply demonstrated by some of the recent financing deals set up by the bank, which provided leading companies with the financial backing they need to fulfil their ambitions.

Delegating funds
For instance, QR 800m financing was provided to Nasser Bin Khaled Holding (NBK); QR 4.5bn was earmarked for The Middle East Dredging Company (MEDCO) to finance the company’s requirements to undertake work at the New Port Project; US $500m made up an Islamic Financing Package to Qatar Telecom (Qtel); US $683m financing was provided to Al Jaber to finance the company’s infrastructure projects; US $180m was made available to the Qatar Gas Transport Company (Nakilat); QR305m funding was awarded to Qatar Company for Meat and Livestock Trading (Mawashi); and US $500m was earmarked for the Barzan project, it being the biggest financing operation in the energy sector carried out by Qatar Petroleum through Istisna and Ijara.

All this activity has not gone unnoticed by the international media – especially the financial media – who have given a long string of awards to QIB over the years. QIB has been awarded Best Islamic Bank in Qatar by the Islamic Finance News (IFN), Euromoney, The Asset Magazine, and World Finance, to name but a few. Best Islamic Financial Institution in Qatar was awarded by Global Finance; Best Sukuk Deal 2012 came from World Finance; The Bank of the Year 2010 was awarded by the Arabian Business Awards; and various other accolades dating back to 2002.

QIB knows that to stay ahead of the competition it cannot bask in its own glory; and that is why it consistently re-examines its systems and processes looking for better ways to serve its clients. Currently, it seems likely that QIB will be setting the benchmarks for the Islamic financing industry for many more years to come.

Source: IMF. Notes: Figures post 2012 are IMF estimates
Source: IMF. Notes: Figures post 2012 are IMF estimates