DUBAI: Barwa Bank, a Shariah-compliant Qatari lender, expects a sharp increase in its 2013 net profit, driven mainly by billions in infrastructure spending by the Gulf state and growth in its debt advisory and asset management business.
"For the first half of 2013, we were 85 percent up on the same period last year. And for the full year we’re moving along very strongly and expect a positive and material improvement in net profit over 2012," Chief Executive Steve Troop said in an interview as part of the Reuters Middle East Investment Summit.
The unlisted lender is awaiting regulators' approval a public floatation as part of two share sales planned to raise more than 2.05 billion riyals. It posted a profit of 345 million riyals ($94.75 million) for 2012, a 41 percent increase from the previous year.
The company's biggest shareholder, Barwa Real Estate, by contrast, on Monday reported a 40 percent drop in profits for the first nine months of 2013, having drawn on state aid earlier this year.
The four-year old bank, effectively controlled by an arm of the state's sovereign wealth fund Qatar Investment Authority (QIA), is seeing a pick-up in infrastructure development in the country after a slowdown in the last two years, Troop said.
The tiny gas-rich state of Qatar launched plans to spend about $140 billion over the next decade on a rail system, a new airport, a seaport, and hundreds of kilometers (miles) of major new roads, in addition to stadiums that will host the 2022 World Cup soccer tournament.
Barwa outlined a fundraising plan in April which includes the public issue and a similar sized rights issue to existing shareholders.
"We understand that stock market regulators want to manage the runway and make sure we’re not all trying to go public on the same market at the same time so we’re waiting for the appropriate time slot," Troop said.
"We are in contact with the authorities to liaise on the perfect timing," he added.
Barwa Bank is 37.3 percent owned by Barwa Real Estate Co., while Qatar Holding, the investment arm of the Gulf state's sovereign wealth fund, has a 12.1 percent stake.
The remaining shares are owned by several individuals and corporations, according to the bank's results statements.
Barwa Bank, through its fully-owned investment banking arm, The First Investor (TFI), plans to partner with local investors in Qatar to invest in the healthcare sector, TFI Chief Executive Khalid Al-Subeai said in the interview.
"We’re focused on Qatar and we are looking to replicate our venture in the education sector into the healthcare sector," Al-Subeai said.
The bank in June set up an education company in Qatar and is now developing two private schools at a cost of 230 million riyals, yielding 8 percent annually, he added.
The bank also manages a Shariah-compliant Gulf equities fund, with 113 million riyals in assets. The fund has returned 19 percent to investors since inception in late 2012.
"We continue to see AUMs (assets under management) grow as we see the Gulf equity markets are more attractive for investors compared to money market products and the sukuk space," Al-Subeai, who previously ran Morgan Stanley Inc.'s business in Qatar, said.
Qatar infrastructure spend to boost Barwa Bank profit
Qatar infrastructure spend to boost Barwa Bank profit
Saudi business optimism holds firm above 60 on non-oil strength
RIYADH: Saudi Arabia’s Business Confidence Index held at 61.6 points in January, reflecting sustained optimism across the Kingdom’s non-oil sectors, official data showed.
The index slipped 0.6 percent from 62 points in December, the General Authority for Statistics said, but remained well above the neutral 50 threshold, indicating continued expansion in business sentiment.
The sustained momentum in the BCI underscores the progress made under Saudi Arabia’s Vision 2030 agenda, which seeks to diversify the economy by reducing reliance on crude revenues.
“The index continues to reflect prevailing optimism in the business sector, supported by establishments’ confidence in the stability of economic activity and the continued growth across various sectors,” said GASTAT.
According to the report, the BCI for the industrial sector recorded 61.7 points in January, maintaining an optimistic level despite a slight decline of 0.8 percent compared to the previous month.
The slight decline in the industrial sector was driven by weaker confidence around current input costs and expectations for the coming month.
In January, the BCI for the services sector recorded 61.3 points, marginally down 1.2 percent from December, due to a limited decline in confidence related to input costs for the current month and expected inputs for the coming month.
The construction sector’s BCI stood at 61.6 points in January, marking a slight fall of 0.3 percent compared to the previous month.
“The marginal decrease (in the construction sector) is attributed to a limited decline in confidence among construction sector establishments, particularly with regard to input costs for the current month and expected inputs for the coming month,” added GASTAT.
Earlier this month, the Riyad Bank Purchasing Managers’ Index compiled by S&P Global showed Saudi Arabia’s PMI at 56.3 in January, driven by output growth, improving market conditions and stronger demand among non-oil businesses.
A separate January report by Standard Chartered forecasts Saudi Arabia’s economy will expand 4.5 percent in 2026, supported by sustained momentum in both hydrocarbon and non-oil sectors. The bank expects non-oil growth at a similar pace, driven by investment and consumption.
