DOHA Jan 21 Qatar's Doha Bank said on Tuesday
returns on its share capital would be lower this year due to
tough competition in its home market, though a successful bond
sale would boost its financial ratios.
The bank, the fifth-largest by assets in the Gulf Arab
state, finalised the sale of the 2 billion riyal ($549 million)
bond - which enhances its tier 1, or core, capital - on the last
day of 2013, Chief Executive R. Seetharaman told reporters at a
"Two billion was added to the equity from a note that was
issued on the last day of last year," Seetharman told reporters,
adding the bank as no immediate plans for further bond issues.
Doha Bank has been raising its reserves in the last year to
improve its capital ratios which, while high by international
standards, were below many of its local peers.
It had raised 1.55 billion riyals from a rights issue in
March which boosted its share capital by 25 percent.
Following the bond sale, Doha Bank's tier 1 capital ratio
stood at 16.6 percent, Seetharaman told the event on the bank's
The lender reported flat net profit of 1.31 billion riyals
while assets and lending grew 21.3 percent and 21.8 percent
Lending growth in Qatar has been a major driver of banks'
profits in recent quarters and is expected to remain high for
the medium term as the Gulf Arab state spends billions of
dollars on infrastructure and preparations to host the soccer
World Cup in 2022.
But competition is fierce, with 18 local and foreign banks
serving a population of just 2 million people, and one player
having a more than 20 percent market share.
Seetharaman would not be drawn on a net profit forecast for
2014 but said Doha Bank's return on equity would fall to around
15 percent in 2014 from 17.9 percent last year.
"There are a growing number of banks locally... it's eroding
margins," he said.
Some Qatari banks have looked to overseas acquisitions to
counter tighter conditions at home, with Qatar National Bank
and Commercial Bank of Qatar buying
businesses in Egypt and Turkey respectively in 2013.
Doha Bank has pursued organic expansion up until now,
getting approval to start operations in India in December, and
this would continue as increased regulation made buying lenders
overseas more difficult, Seetharaman said.
($1 = 3.6415 Qatar riyals)
(Reporting by Amena Bakr; Writing by David French; Editing by