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(MENAFN - The Peninsula) The ongoing negotiation of merger between al khaliji, Qatar’s second largest retail bank by paid-up capital and the International Bank of Qatar (IBQ), is going on positively, al khaliji Acting Chief Executive Officer, Robin McCall told the bank’s first half 2010 investor and analyst briefing yesterday.
“It (the merger) remains very much in its formative stages and we have recently appointed several advisers to assist with structuring, fair valuation, and due diligence process,” McCall said.
Speaking of an eventual timeframe the advisors’ report would be ready, he said it was too early but due diligence process can take anything up to 8 weeks. He added that it all depend on several variables within the timeframe like shareholders endorsement of the transaction and obtaining appropriate regulatory approval.
As for the rationale behind the merger, McCall said there was too much banks in the market and additional financial institutions entering the market with competition increasing.
“Should the merger proceed, it will result in a significant presence in Qatar for the new entity. This presence will be combined with UAE and European operations, an expanded specialised product capability, and a greater lending capacity,” he said, adding that the new entity would benefit from the synergies in terms of revenues and costs.
The bank is confident that the merger, if it takes place, will also boost market competitiveness and consolidation. Al khaliji reported a strong increase in net operating income of QR320m in the first half of this year, up 24 percent from QR258m for the corresponding period in 2009.
Net income reached QR112m for the six months ended June 30, 2010, compared to QR108m for H1 2009, showing a 3.3 percent increase. Net profit includes a net impairment charge of QR17m compared to QR30m at June 2009. Earnings per share attained QR 0.31, compared to QR 0.30 at 30 June 2009.
Net income from Islamic Financing activities rose by 41 percent compared to the period ending June 30, 2009 reaching QR 45m.
Loans and advances to customers amounted to QR9.2bn in H1 2010, showing an increase of 12.7 percent when compared to the corresponding period last year and 7 percent when compared to December 31, 2009.
Financial investments, acquired as part of al khaliji’s liquidity management strategy, reached QR6.2bn on June 30, 2010, compared to QR4bn on December 31, 2009 and QR2.8bn on June 30, 2009. ‘Available for sale’ financial investments represented 89 percent of financial investments held by al khaliji on June 30, 2010. 10 percent of financial investments are held-to-maturity. On June 30, 2010, customer deposits reached QR9bn. Total shareholder equity, including paid-up share capital, reserves and retained profits, reached QR 4.8bn.
McCall said, “al khaliji’s solid results are due to the successful execution of our wholesale-led strategy developed at the end of 2009, with positive contributions at the operating lines coming from all our customer facing divisions. It remains our intent to build market share in our chosen segments with our preferred customers.”
He also noted that the improvement in the regional and local outlook is now sustainable and a double digit growth rates in oil and non-oil sectors in Qatar is expected to be maintained in 2010 and 2011.
Recently, al khaliji’s Chairman and Managing Director, Sheikh Hamad Bin Faisal Bin Thani Al Thani pointed out that al khaliji is well positioned to benefit from the economic expansion and rising demand, in line with the bank’s growth plans over the medium-term.
By Nasser Al Harthy
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