Kit Gillet talks to the group CEO of Qatar Islamic Bank about the role Islamic banking plays in Qatar today, the potential impact of the 2022 World Cup, and what is holding back the global adoption of Islamic finance.

Qatar Islamic Bank (QIB) had a strong 2021, with assets up 11.2% year-on-year and net operating income rising by 10.1%. The bank is at the forefront of the growth of Islamic banking in Qatar, where sharia-compliant assets now account for 28% of total banking sector assets.

Q: What role does Islamic banking play in Qatar today?

A: Islamic finance has become mainstream in Qatar and the long-term growth prospects remain promising. Recent figures confirm that Islamic assets remain the fastest-growing banking segment.

The continued growth of Islamic finance in Qatar and the Gulf Co-operation Council (GCC) region is translating into increased visibility within the global finance markets, as the GCC remains the world’s largest Islamic finance region.

Authorities in Qatar have been regulating and supporting the development of Islamic finance, but we are not the only country with plans to become a hub for Islamic finance services. What I believe will make the difference in the future is how much we attract talent to innovate, especially in the domain of digital banking, as well as how fast banks will adjust their strategies to address emerging environmental, social and governance requirements.

Q: Is the Islamic finance sector becoming increasingly competitive in Qatar?

A: Recent investments and focus on innovation, technology and people have allowed Islamic banks to introduce advanced products and services, efficient processes and competitive pricing. Islamic banks in Qatar have developed strong capabilities and the capacity to structure and finance major infrastructure projects that are taking place in preparation to host the 2022 World Cup and as part of the country’s National Vision 2030. As a result, the Islamic banking sector performance has witnessed strong growth rates.

The prospects for Islamic banks remain very positive, as they are enlarging their customer base and appealing more to customers who have not been previously inclined to use sharia-compliant products and services. Indeed, Islamic banks are simultaneously increasing the share of wallet of their traditional customer base and attracting new customers.

Competition is increasing between all banks in Qatar, while the recent merger activity has also created financially stronger and more ambitious institutions.

Q: How would you characterise the performance of the Qatari banking sector in 2021?

A: Qatar’s banking industry demonstrated its agility and resilience in 2021, and we are expecting to witness further growth to continue in the future. The banking sector remains highly profitable, highly capitalised, and continues to be a catalyst for economic development and growth. Total sector assets grew by 8.6% year-on-year to QR1.8tn ($501.8bn) in 2021, in line with average growth in recent years.

During the past few months, we have seen favourable movements to support economic growth in 2022 and beyond. I’m referring to the global oil prices increase, increased global demand for gas coupled with the increased natural gas production in Qatar, as the North Field expansion is continuing, as well as the gradual restoration of economic activities post lockdowns. The 2022 World Cup is expected to contribute around $20bn to the country’s economy.

Keeping all those factors in mind, the International Monetary Fund has increased its forecast for Qatar’s real gross domestic product growth, estimating a 3.2–3.5% rise in 2022.

Q: What do you think the legacy of the World Cup will be for Qatar’s economy?

A: Hosting the 2022 Fifa World Cup has created opportunities to diversify Qatar’s economy, increase competition, attract investment and stimulate growth. Qatar has built world-class infrastructure that will be useful for generations to come.

This is a historic opportunity to further enhance Qatar’s reputation as a politically and economically stable investment destination.

Q: What is still holding back the global adoption of Islamic finance?

A: The Islamic finance market is growing rapidly, increasing by double-digit growth rates year-on-year and representing around 6% of global banking assets as of the end of 2020.

I am quite optimistic on the future growth of Islamic finance as the majority of Islamic banks have realised by now that the ticket to success is not just having the Islamic licence to operate, but involves building high-performing, competitive banks.

Since banking products are commoditised, customers — coming from conventional and Islamic institutions — have the same requirements: competitive pricing, good customer service and convenience. Tech-savvy, younger generations of customers are placing the utmost importance on the digital value propositions banks are offering.

On the other hand, the lack of legislative infrastructure for sharia-compliant institutions, products and services in many parts of the world still remains a challenge that holds back the growth of Islamic finance.


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