The financial year 2019-2020 has been a “challenging” one for banks operating in Qatar, KPMG said and noted the “overall impact is expected to be cushioned by the resilience and strength” of the banking system.
As of March 31, the net profit attributable to shareholders registered a nominal decrease of 0.1% when compared with previous year’s net profit as a result of increased provisions, KPMG said in its ‘Qatar banking perspectives 2020’.
Total assets registered a growth of 1.8% to QR1,654bn when compared with results as of previous year, it said.
The global pandemic situation has signalled banks to accelerate their digital transformation agenda and embrace new Fintech strategies, thus enabling them to develop products and services that meet existing and ever-changing customer and regulatory requirements, overcome current market challenges, while building resilient systems and enhancing operational efficiencies, it said.
On strategic implications of Covid-19, the report noted, “Banks have introduced several measures such as cost reduction initiatives, process rationalisation, enablement of digital channels and increased their focus on core banking activities, which are proving quite effective when it comes to containing the impact of Covid-19 on their books.”
With regard to technology and innovation, KPMG said, “If there was one clear post-Covid-19 winner to be designated, it would certainly be the ‘Digital Transformation’ agenda, as it has thrived in the midst of the crisis and will seize the opportunity to disrupt the banking sector in the coming years.”
On regulations, tax and transfer pricing related regulations will have a significant impact on the Banking and Financial Services sector, given the high volume of day-to-day related party transactions, inter-dependencies between entities for various product offerings and integrated functions for corporate finance services, all coming under scrutiny.
In relation to governance and control, the report highlighted that all crises create a natural opportunity to adapt to new trends especially if those are transforming the world economy globally, such as the sustainability trends in business.
Implementation of sustainability driven strategies will play an important role not just for several high-profile companies, which are the clients of banks, but it will be of high importance for banks themselves.
Omar Mahmood, head of Financial Services for KPMG in the Middle East & South Asia, and partner at KPMG in Qatar, commented, “The standing of Qatar’s banks in the international market remains firm, with the sector remaining in a strong position, regardless of potential geopolitical uncertainty.
“It remains to be seen whether banking will respond in a way that amplifies or dampens the acute economic challenge; however from what we have seen in the past few months, banks have been quick to respond to the crisis with proactive regulatory and state level support.”
Further insights included in the report find that there is unanimous agreement that the world will be dealing with the effects of the Covid-19 pandemic for the foreseeable future, and that the banking sector will most certainly evolve as a result.
Local financial institutions will need to be agile, flexible and willing to transform their business models and practices in order to succeed and secure their financial strength for future growth.
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