Qatar International Islamic Bank (QIIB), which just completed its inaugural Sukuk issuance on the 18th October 2012, outlined a comprehensive expansion strategy in its Sukuk prospectus listed on the Irish Stock Exchange, disclosing plans to seek strategic partnerships in regional and international markets which could involve acquisitions.
The bank, which highlighted promising prospects in its Qatari home market, also noted its particular interest in the Southeast Asian market, while keeping an eye out for opportunities in the MENA region. “QIIB plans to establish and develop its presence in regional and international markets by seeking strategic alliances and/or partnerships within targeted markets (either directly or through equity investments),” it said.
In addition, the bank outlined strategies for its organic expansion, following a reorganization of its divisions in 2011 which segmented its business lines into four operational divisions.
Asian ambition
In its most telling disclosure of its plans abroad, QIIB told investors that it is evaluating Indonesia, Singapore and Malaysia for the establishment of a regional presence in Southeast Asia.
“QIIB believes that the Southeast Asian region is fast establishing itself as an Islamic financial center with its natural Islamic population bases and therefore presents opportunities for Islamic banks.
“Initially, QIIB plans to establish a representative office in a Southeast Asian country. This representative office will support the development of the bank’s trade finance services. Depending on suitable business opportunities arising, QIIB then intends to establish a permanent unit such as an offshore branch in order to create a permanent present in Southeast Asia,” it said. It added that it has held early talks with the Moroccan government to explore the possibility of supporting the establishment of Islamic banks and Takaful firms in the country.
QIIB’s current investments in entities outside Qatar include in Syria International Islamic Bank (SIIB), International Bank of Britain and the Pak-Qatar Family Takaful as well as Pak-Qatar General Takaful companies in Pakistan. The bank also noted US sanctions imposed on SIIB; stating that it continues to hold a 20% stake in the bank but is not “currently actively involved in, or capable of influencing, the management and operations of SIIB.”
The bank said that it would continue to develop its existing investments in Pakistan and in Syria, where it also owns 20% of Syria Islamic Insurance Company. Its further investment in Syria is however subject to developments in relation to sanctions.
Regional opportunities
Amid plans to expand its presence further afield, QIIB also expressed interest in strengthening its franchise closer to home, taking measures to establish itself regionally through strategic acquisitions, either directly or in partnership with other Islamic businesses.
“Social and economic developments within the [MENA] region provide opportunities for QIIB to leverage off the growth expected in the Qatari market in order to establish its presence in selected markets across the wider MENA region,” it said.
In particular, QIIB highlighted countries such as Egypt and Tunisia, which have undergone significant change in tandem with political developments in the MENA region. “With predominantly Muslim populations in both countries, the situation presents opportunities for Islamic banks such as QIIB to enter these markets,” it said.
Meanwhile, back home, the bank has identified opportunities tied to Qatar’s ‘National Vision 2030’, which focuses on areas including economic development that, in turn, support the need for financial products and services. Additionally, the bank highlighted infrastructure and sporting facility development opportunities that will arise from Qatar’s preparations for hosting the 2022 FIFA World Cup.
Its other plans for growing in its home base include tapping into the wealth expected to be generation from Qatar’s economic growth by expanding the bank’s corporate financing division, developing an affluent banking business line within its retail financing division and moving away from its real estate-focused financing portfolio.
The bank also noted that the closure of conventional banks’ Islamic windows in Qatar has opened a door for the bank to acquire a bigger market share domestically by acquiring customers from its peers’ defunct operations.
Organic growth targets
The bank’s expansion strategy comes on the back of a reorganization of its operating units in 2011, which segmented its businesses into four main areas of focus, namely: retail financing, commercial (small and medium-sized enterprise [SME]) financing, corporate financing and investment and treasury.
Efforts planned under this approach include targeting to grow its commercial (SME) financing assets and liabilities by at least 20% over five years from 2011-16. It has also further segmented its corporate financing assets into separate portfolios for government and government-related entities and private corporate entities. “QIIB will place a particular emphasis on projects in oil and gas, utilities and telecom, aviation, health, education and rail sectors and continue to move away from pure real estate financing,” it noted.
Meanwhile, its regional and international expansion plans also play a part in strategies under its investment and treasury business line, where the bank aims to leverage opportunities in alternative international and “cornerstone” investments to help cement its position abroad. Additionally, QIIB plans to develop products such as investment funds and explore the potential of direct investments in equities and sector or investment-strategy specific funds. — EB