Qatar Financial Services

While the insurance sector continues to expand and post solid profits, Qatar’s policy writers are looking to improve profit margins by tapping into potential for further growth, particularly in construction and infrastructure insurance.

The successful launch of the world’s largest-ever, dollar-denominated Islamic bond is a notable milestone in the rise of Qatar’s sharia-compliant finance industry. An ambitious infrastructure investment programme and growing per capita wealth are supporting the growth of Islamic financial services, as the authorities look to continue regulatory reform.

Capital markets in Qatar should receive a boost from recently announced reforms that clarify oversight, broaden access and simplify transactions. Through such measures, the authorities and the private sector are hoping to increase liquidity and activity in a market considered to have significant potential.

The country’s banks are turning to the international bond market to bolster their cash reserves, which are likely to be needed to help fund the country’s massive infrastructure programme over the coming decade.

As the overall economy continues to pick up steam, Qatar’s insurance sector looks set to benefit greatly, with strong growth and profits predicted for 2012 and beyond. However, for the sector to truly grow, the industry is conscious that it needs to encourage greater uptake of policies.

The first sale of an Islamic finance portfolio since Qatar’s decision to ban conventional lenders from conducting sharia-compliant banking operations is a harbinger of what’s to come as the Islamic finance sector begins to benefit from the ruling. The domestic segment, however, may have to contend with greater competition from foreign Islamic banks keen to enter the lucrative market.