The pressing question facing banks in Qatar not ‘whether’ to expand internationally, but ‘how’ do so in a way that creates value, a report said.

Banks in Qatar could be forgiven for looking back upon the past five years as a period of relative abundance, added the recently published research by VTA, a boutique advisory firm focused on the banking sector.

With some support from the Central Bank and on the back of a very strong economy, this has been a period of profitable growth for banks in Qatar, the report said, adding that the next five years will look very different.

VTA analysis suggests that investors expect Qatari banks to continue on the same trajectory. However, GDP growth is forecast to fall by circa 6 per cent and the opportunities to increase returns appear to be limited.

Without a clear international expansion strategy, banks in Qatar will find it difficult to meet, let alone exceed, the expectations investors have built into their current market valuations, the report said.

The paper argues that banks in Qatar must expand their current business. Doing more of the same could spell the beginning of a slow decline for the market leaders, but equally importantly would translate to a real missed opportunity.

Expanding now will mean doing so from a position of strength. Banks around the globe are scaling back their international operations. Qatari banks are well placed to capitalize on this trend of de-globalisation, according to the VTA analysis.

The authors conclude that now is the time for Qatari banks to develop and execute a well thought through plan for international expansion.

VTA was founded by Vivek Ramachandran and Truett Tate, two senior banking executives who saw a clear need for informed and differentiated advice in the sector. – TradeArabia News Service