Doha Bank is planning to raise the capital by 20% through a rights issue by the first half of 2017 in order to meet its strategic business development requirements.
The bank is proposing to issue 51.67mn new shares to existing shareholders. The board’s proposal will have to be approved by shareholders at an extraordinary general assembly meeting, which is scheduled to be held in March next year.
Further issuance details such as premium will be disclosed after completion of necessary studies and obtaining approvals from the competent authorities, Doha Bank chairman Sheikh Fahad bin Mohamed bin Jabor al-Thani said after a board meeting yesterday.
The proposed capital increase will enhance the shareholders’ equity base and support the bank’s prospects for achieving its strategic goals at the local, regional and international levels, he said, adding it will also strengthen the bank’s lending ability and improve its competitive edge.
“The proposed capital raise would also enable the bank to achieve the targeted growth of the balance sheet and income statement and attain highest levels of performance,” Sheikh Fahad said.
In June 2015, Doha Bank enhanced its Tier 1 capital base and capital adequacy ratio, strengthened its lending capacity and improved its competitive edge and prospects for achieving its strategic goals through the issuance of Tier 1 capital instruments for the second time amounting to QR2bn as per the terms and requirements of Qatar Central Bank. The first QR2bn issuance of similar instruments was carried out at the end of 2013.
In March this year, Doha Bank had announced that it was revisiting its three-year strategic plan for 2016-18, especially in relation to its overseas operations, as well as diversifying income sources, in view of expected “pressure” on domestic lenders’ performance during 2016 and 2017.
Doha Bank had in December last year signed a $575mn syndicated two-year loan with its relationship banks for general corporate purposes and it was oversubscribed.
The bank, which has three branches in India, is planning to scale up its operations into a wholly-owned subsidiary in the Asian country, its group chief executive Dr R Seetharaman had said during Indian Prime Minister Narendra Modi’s visit to Qatar in June this year. Early this year, Capital Intelligence, a global credit rating agency, had affirmed Doha Bank’s financial strength rating at ‘A’, factoring in the bank’s specialist franchise in Qatar, the business potential of its new operation in India, as well as by its still sound profitability.
A sustained growth in core earnings led Doha Bank report a net profit of QR1.1bn in the first nine months of this year.
‘Doha Bank picks banks for bond issue’
Doha Bank, Qatar’s fifth-largest lender by assets, has picked banks for a conventional bond issue, banking sources said yesterday according to Reuters.
One of the sources said the issue would be in the region of $300mn to $400mn and that the issue was planned for the first quarter of 2017.
The bank was not immediately available to comment.
The sources declined to say which banks Doha Bank had mandated to arrange its issue.
The bank received approval earlier this year to raise funds with up to $5bn worth of short-term instruments, including $3bn through certificates of deposits and euro commercial paper worth $2bn.