QATAR: Qatar’s overbanked system could see more consolidation caused by pressure on banks’ profitability from the coronavirus pandemic, particularly those with weaker franchises and limited pricing power, according to Fitch Ratings.
The merger between Al Khalij Commercial Bank and Islamic bank Masraf Al Rayan will potentially create Qatar’s largest Islamic bank by total assets and diversify the latter’s business model which is primarily focused on wholesale.
“Further, Qatari bank mergers could generate cost synergies that alleviate pressure on profitability from compressed financing margins and higher loan impairment charges due to the pandemic,” Fitch says.