Qatar Islamic Bank hit by $1.9 billion deposit outflow

DUBAI: Qatar Islamic Bank (QIB) was hit by a 6.9 billion riyals ($1.9 billion) deposit outflow in the second quarter, which analysts said could be linked to Qatar’s rift with Saudi Arabia, the UAE, Bahrain and Egypt.

Some foreign banks have scaled back new business with Qatar since the four Arab nations cut diplomatic ties with the country and imposed economic sanctions on it on June 5, while Qatar Investment Authority has placed deposits with some local banks to help ease liquidity.

The bank also reported an 8.3 percent rise in second-quarter net profit on Tuesday, according to Reuters calculations, which was in line with analysts’ forecasts. But the bank did not comment on the diplomatic crisis in its results statement.

“The out-flux may have been related to withdrawal of deposits from other Gulf Cooperation Council (GCC) countries post the strained diplomatic ties or it may be an usual outflow of deposits, after the bank witnessed a strong 8 billion riyals of inflow in the first quarter,” Chiradeep Ghosh, banking analyst at Bahrain’s Securities & Investment Company (SICO), said.

QIB is considered one of the banks most dependent on funding from its Gulf neighbors, obtaining 24 percent of its funding and 24 percent of deposits from the rest of the GCC, according to research published last month by Goldman Sachs.

Customer deposits at the bank reached 97 billion riyals at the end of June, up 2 percent from the previous year, but down 6.6 percent from the previous quarter.

QIB made a net profit of 609.7 million riyals during the three months to June 30, compared with 562.9 million riyals in the same period a year earlier, Reuters calculated from financial statements in the absence of a quarterly breakdown.

Four analysts polled by Reuters had forecast on average a quarterly net profit of 562.8 million riyals.

QIB, which in May completed the issue of a $750 million sukuk, posted net profit of 1.17 billion riyals for the six month period, 10 percent higher than the same period a year earlier, according to a bourse statement.

Financing activities reached 110 billion riyals at the end of June, up by 13.6 percent from the year earlier period.

In a separate development, Vodafone Qatar was struggling Tuesday to bring its network online following a widespread outage.

The telecom company said on Twitter that network engineers had arrived in the country to fix the outage that began on Monday. It said that “all hands are on deck” to fix the problem.

Vodafone competes against Ooredoo, formerly known as Qtel.

Both companies are partly owned by government-linked entities.