Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qatar Islamic Bank QPSC (DSMD:QIBK, Financial) reported a net profit of QAR985 million for Q1 2025, marking a 3.1% increase compared to Q1 2024.
- Total assets grew by 10.2% year-over-year, reaching QAR212 billion, driven by financing and investing activities.
- Customer deposits increased by 8.4% year-over-year, reaching QAR133.5 billion, supporting strong liquidity with a financing to deposit ratio of 91.4%.
- The bank maintained a low cost-to-income ratio of 16.6%, the lowest in the Qatari banking sector.
- The capital adequacy ratio improved to 21.4%, well above the Basel committee's minimum requirement, reflecting strong capital management.
Negative Points
- Net interest margin (NIM) pressure was noted, with a slight decrease compared to previous quarters, raising concerns about future profitability.
- Fee income growth was sluggish, with a marginal decrease compared to the previous year, partly due to the deconsolidation of QInvest.
- There is uncertainty regarding the impact of new corporate tax regulations, with potential implications for future financial performance.
- Stage 2 loans, while reduced, still represent a significant portion of the portfolio, requiring ongoing risk management.
- The bank's loan growth guidance remains cautious, with potential repayments from the public sector affecting overall growth projections.
Q & A Highlights
Q: Can you provide insights into the strong loan growth this quarter and the outlook for the rest of the year?
A: Gourang Hemani, CFO, explained that the loan growth was driven by improved business conditions and increased interest from both public and private sectors. Growth was notably strong in public sector borrowings, private banking, and retail banking. The bank expects this trend to continue, particularly with projects related to the North Field expansion and hydrocarbon capacity expansion in Qatar.
Q: There seems to be some pressure on Net Interest Margins (NIMs) this quarter. Can you elaborate on this and the outlook for the year?
A: Hemani noted that while there was a slight decrease in financing yields, the overall NIMs remained stable at around 3%, similar to last year's full-year average. The bank anticipates maintaining flat NIMs for 2025, despite global uncertainties.
Q: Could you provide an update on the corporate tax situation and its potential impact?
A: Hemani detailed that Qatar's new income tax amendments are under consultation, with potential reliefs available for entities operating in fewer than six countries. The bank has prudently built provisions to cover any potential tax liabilities, ensuring no retrospective impact on the bottom line.
Q: What is the outlook for fee income, given its sluggish performance recently?
A: Fee income has been impacted by the deconsolidation of QInvest, which contributed significantly to advisory and investment banking fees. However, the bank expects a 3-4% growth in fee income for the year, driven by retail business growth, particularly in cards and services.
Q: How does the bank plan to manage its liquidity and funding, especially with upcoming Sukuk maturities?
A: Hemani stated that the bank maintains a strong liquidity position, with a financing-to-deposit ratio well below market averages. The bank is not under pressure to refinance immediately and will seek favorable market conditions for any new issuances, having already engaged in private placements earlier in the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
