Qatar Islamic Bank hit by deposit outflow, while profit rises

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 United Arab Emirates, 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 state-owned Qatar Investment Authority has placed deposits with some local banks to help ease liquidity.

QIB 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 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 neighbours, 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 period, 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.