By Phillip Mann – phillip.mann@internationalbanker.com
According to the Ministry of Development Planning and Statistics (MDPS), Qatar’s economy grew by 6.2 percent last year, placing it among 2014’s fastest-growing economies in the world. Since 2010, annualised growth has not dropped below 5 percent, not even for a single quarter. This is a remarkable statistic given the much-publicised woes that were experienced by several of the world’s leading industrialised economies during the same period.
This sustained economic expansion has, therefore, done little to knock Qatar of its perch as the world’s richest country in “per capita” terms, which currently stands at more than $143,000 (based on purchasing power parity), as reported in the International Monetary Fund’s April 2015 World Economic Outlook. This is almost $50,000 more than second-placed Luxembourg.
The large proportion of affluent citizens in Qatar, therefore, require the highest standards of service in banking in order to ensure their wealth-management, corporate-banking and other personal-banking needs are being fully met. As a consequence, private banking, corporate banking and retail banking are sub-sectors within Qatar’s financial services industry that carry particular weight. International Bank of Qatar (ibq) has a long history of excellence in all of these areas.
Private banking: an ibq flagship business
Next year will see ibq celebrate its 60th birthday, making it among the oldest banks currently operating in Qatar. This has helped cement personal client relationships that have been developed over generations. In particular, ibq has a long-standing legacy within the local high-net-worth and ultra-high-net-worth communities, which originated around the same time as the conception of the bank in 1956. Possessing these comparatively deep-rooted relationships with Qatar’s affluent community has allowed ibq to develop unparalleled levels of expertise and knowledge concerning the local financial landscape.
Chaouki Daher, DGM, Head of Private Banking
This was recently highlighted by Chaouki Daher, deputy general manager and head of private banking, who considers ibq’s private-banking experts to be at the forefront of the industry, experienced professionals who can provide “some of the most in-depth knowledge of confidential and personalised banking services for high-net-worth and ultra-high-net-worth individuals in Qatar”. Mr. Daher also attributes ibq’s success in private banking to the bank’s core guiding principles of “privacy, confidentiality and integrity”. The bank focuses on developing tailored relationships and offering a diverse suite of wealth-management services in order to drive growth in its private-banking business.
However, ibq’s private-banking business is not solely generated by historic relationships; 2014 saw a considerable increase in the lender’s client base throughout its main market segments, as well as a sizeable overall rise in its private-banking total-assets portfolio. This suggests that ibq is continuing to play to its strengths and still considers private banking a priority business.
Corporate Banking
Despite being one of the smallest countries in the GCC (Gulf Cooperation Council), Qatar ranks as one of the richest countries in the world in terms of GDP per capita. The role of the financial sector in promoting growth is now widely recognised, and the evidence is that a large and competitive banking sector is strongly associated with higher growth rates.
Qatar has the fastest-growing banking sector in the GCC with its banks, including ibq, offering a range of products and services that incorporate the very latest innovations in technology and product structure.
The Qatari economy has relied heavily on its oil and gas exports, which are largely funding the massive infrastructure developments that are underway to gear up for hosting the FIFA World Cup in 2022. These mega projects have attracted large corporates, such as construction firms, engineers, designers, consultants, hoteliers, retailers and brands, not to mention service industries from all over the world.
This increasing industrialisation and focus on upgrading infrastructure, including education and healthcare and economic diversification in line with Qatar’s 2030 National Vision, has created a range of opportunities for new business and industrial sectors, including real estate, technology, tourism, manufacturing, telecoms and retail.
At the same time, non-oil and -gas GDP has also been consistently growing as a proportion of the national GDP in recent years, as the government continues with its efforts to diversify the economy and encourage the private sector to expand its role within the economy of Qatar.
Against this background, ibq has a long history in corporate banking in Qatar, as one of the oldest banks in the country, focusing on helping companies, in both the public and private sectors, take advantage of opportunities for growing their businesses. With its vast local and regional knowledge, ibq corporate banking is built on a deeply entrenched relationship model with consistent customer touchpoints—being always accessible with a service-driven culture and a team that understands the financing needs of its corporate customers.
Bhupendra Jain – AGM, Head of Corporate Banking
Bhupendra Jain, assistant general manager and head of corporate banking, explained that not being too big is often an advantage; ibq corporate banking can leverage off this strength and be quick in decision-making, more flexible and very customer focused. Taking on the role of advisor and consultant to its corporate clients is also key to the bank’s strategy, as this leads to securing deep, mutually beneficial client relationships and to being able to advise clients objectively on their growth plans.
Muhannad Kamal, General Manager, Wholesale Banking
Muhannad Kamal, general manager of wholesale banking, calls this premium banking with an overall underlying conservative and client-focused theme. As he added, apart from the excellent staff, the other key elements for ibq’s success across business units has been careful and consistent client selection, including stringent “know your customer” criteria, serving client needs across the value chain in private, corporate or retail banking, and providing clients access to the entire ibq management.
Muhannad also stressed that ibq understands risk because the bank knows its customers well and with whom it is dealing. Client relationships at ibq are built on mutual trust and personalised service, using a private-banking model across the board in both corporate and retail banking. This has led to the bank winning many awards for customer service and customer satisfaction, with word-of-mouth referrals from customers citing their positive experiences with the bank. For ibq, he emphasised, a customer is not a number; he or she is an important relationship and is treated as such across all the bank’s departments.
Retail banking
ibq’s retail-banking division has been making recent headlines and winning plenty of industry awards, thanks in no small part to its ground-breaking customer rewards programme, thang. This highly innovative service is designed to reward ibq’s customers with some of the best products currently on the market.
Customers are offered the chance to accumulate points when they use a wide range of ibq’s banking products and services, which they can then redeem with more than 800 airlines, 16,000 hotels, car rental services and many more global products and services.
The wide-ranging benefits and the flexibility of using the programme set thanq apart from the rewards programmes of other banks. Points can be earned not just by using ibq’s credit card but also by maintaining a current account balance, taking out an ibq loan for personal, vehicle, mortgage or affluent purposes, referring a friend to the bank and by using many more of the bank’s services. Banks of similar size within Qatar simply do not offer this degree of flexibility. Indeed, some of ibq’s competitors offer redeemable points only upon using the specific bank’s credit cards. Customers can fly to any destination with any airline at any time. Additionally, customers don’t have to wait to accumulate the designated points required to make a specific travel booking—it can be booked partially using the accrued points, with the remaining amount put on an ibq credit card.
Hassan Al Mulla – Head of Retail Banking
Hassan Al Mulla, head of retail banking at ibq, recently described thanq as a “real example of an immensely successful customer-centric and market-defining product innovation in Qatar”. Appreciation of thanq from outside the bank, furthermore, suggests that the rewards programme has gained international recognition. Raghav Prasad, general manager of Gulf countries at MasterCard, considers thanq to be “an example of how consumer-centric programmes play an integral role in changing the landscape of reward programmes.”
While thanq has been designed to service a large customer base, ibq also has a rewards package aimed specifically at its more affluent clientele. The Elite Banking package provides customers with personal-banking officers to assist with all their financial needs and access to exclusive Elite lounges in all branches. Elite Banking pays higher rates on deposit accounts, offers preferential product pricing, travel insurance, purchase protection and gives priority access to ibq-sponsored events.
A mobile-banking application is on its way, as ibq prepares to launch this banking channel for all customers, incorporating the very latest mobile developments to allow customers to enjoy banking-on-the-go as a convenient way to manage a banking account from a mobile phone.
Overcoming challenges
In a difficult global environment characterised by a benign global economy and the implementation of an unprecedented amount of banking regulations, 2014 saw ibq stick to its core banking principles and strong governance to deliver a strong 5-percent growth in net profit compared to the previous year. In the last 10 years, loans and advances to customers have grown by 27 percent and deposits by 22 percent, while from a regulatory standpoint, ibq’s capital-adequacy ratio at the end of 2014 was a healthy 6.55-percent above the minimum requirement set under Basel II.
The severe drop in global crude oil prices during the second half of 2014 was also particularly tough for oil-exporting countries, Qatar included. The government, however, had already been committed to a policy of diversification and expansion of non-hydrocarbon activities, which managed to absorb much of the overall damage caused by the oil-price shock. Indeed, the 6.2-percent growth of Qatar’s economy was driven by double-digit growth in the non-hydrocarbon sector, underlining the conscious shift away from the natural-resources sector that the government has been enacting.
The increase in diversification away from hydrocarbon-related business implies that the Qatari economy and society has changing wants and needs. ibq has recognised the need for itself, and for banks in general, to keep pace with such a change. By focusing on its key areas of competency and maintaining standards of excellence in the business lines with which it is familiar, ibq believes it is in a strong position to mitigate any adverse macroeconomic changes. The bank is also looking at possible horizontal or vertical partnerships in order to adapt, diversify and sustain growth.
In 2014, National Bank of Kuwait (NBK) sold its 30-percent shareholding in ibq to local Qatari investors.
Jabra Ghandour, Managing Director
According to Managing Director Jabra Ghandour, commitment and service to its customers are ibq’s top priorities. ibq sees itself as the bank of Qatar with long-standing client relationships driven by an extremely strong service culture and delivered by an experienced team. Based on a deep-rooted client-relationship model, ibq corporate banking targets strong privately held Qatari companies, government-owned institutions, as well as sound foreign firms operating in Qatar. ibq is continuously looking at opportunities to diversify its business outside of Qatar through international expansion in markets that make sense to the bank and meet the needs of ibq’s clients in Qatar and the GCC.
Jabra Ghandour added that the private-banking division’s long-standing legacy with local high-net-worth and ultra-high-net-worth customers in Qatar has enabled the bank to develop profound links with generation after generation. With such personalised relationships and ibq’s unmatched levels of expertise and knowledge, private banking continues to grow strongly.
Turning to ibq’s retail-banking division, Ghandour highlighted the coveted international industry awards it has won with its ground-breaking customer-rewards programme, thanq. The highly innovative scheme is an example of one of the most successful customer-centric and market-defining product innovations in Qatar. ibq has a parallel rewards programme in place for its more affluent clientele, too, with ibq’s Elite Banking package.
Given the strong annual financial performance achieved by the bank in 2014, as well as the increasingly diversified economic environment in which it now operates (not to mention the likely economic boost that will result from the approaching 2019 World Athletics Championships and 2022 FIFA World Cup, both being held in Qatar), it would appear that exciting times lie ahead for ibq and its clients.