Qatar National Bank SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Expanding economies and globalization: Worldwide globalization has increased the average income level and spending capabilities of people of many countries. This was also reflected in QNB’s market for the last two decades which involved a growth of 14% of the total assets, 15% of the total loans written and 13% of the total customer deposits in last 5 years (2014-2018), according to December 2018 financial report. The report also shows an increase of 8% of the net profit in last 5 years (2014-2018). QNB was also successful in providing various innovative and improved products and services to its customers in addition of having a huge brand recognition/reputation. The population has been growing in the world and is expected to grow at a positive rate for the upcoming years, which is beneficial for QNB group, as there will be an increase in the number of potential customers that they can target in future. Economic growth also brought new and improved technology which comes up with numerous benefits suitable for many segments of the bank. With the help of technology, operations can be automated, thereby reducing the costs and also enables better data collection on customers and better customer service experience. QNB’s trend of continuous market expansion and holistic innovation approach has the ability to capitalize on global economic expansion and achieve its long-term vision of becoming a global bank by 2030.

2. Uncovered attractive markets in Asia and Africa: Even though QNB group holds the first rank and is the most valuable bank in Middle East and Africa region, out of 195 countries in the world, QNB has a reach over only 31 countries across three continents (Asia, Africa and Europe), out of which countries like Qatar, UAE, Syria, Palestine, Iraq, Jordan, Turkey, Tunisia, Libya, Indonesia and Togo has dense branch and office network and the rest of the countries have very few branches and offices, as per corporate presentation of the first quarter of financial year 2019. Hence the group’s primary focus should be on MEASEA market for further investments to fulfill its vision of becoming the leading bank of MEASEA market by 2020. Also 37% of QNB’s net profit of 2018 was delivered by international business, with an increase of 16 percentage points in past six years. Hence QNB’s efforts of international expansion with more diversified revenue streams have proven beneficial for the company. In 2017; QNB opened their first branch in Mumbai, India and, in 2018; it opened new branches in Oman and Kuwait with aim of capturing growing market and business opportunities. The company also aims to open a branch in Hong Kong, China in 2019. Focus can also be shifted in development of various products and services that have low market share, which can lead to further market expansion and new customer attraction. QNB’s exceptional financial strength can make all of these possible without affecting the profit margin.

3. Focus on delivering premium customer experience: For past several years, QNB group has successfully delivered world-class products and services to their customers, and this was made possible for QNB’s focus on innovation and digitization. Several innovative technological changes like; new internet and mobile applications for improving proximity and customer experiences, increasing the number of electronic cheque machines, touch-screen interactive ATM machines with more functionality, deploying highly-versatile Interactive Teller Machines for secure and hassle-free transactions, enabling remote queuing service, launching instant transfer services between Qatar and India, and establishing the first-ever and only digital bank in Turkey, has saved a lot of time and labor and helped QNB to focus more on functions of their branches. This has also provided the sales and advisory channel of the bank, the opportunity to focus more on customers and add value and quality to their services, thus improving the quality of customer service and better customer satisfaction. The result of all such efforts of QNB has reflected in QNB’s 2018 Annual Report, showing a 10% growth of QNB ALAHLI and 7% growth of QNB Finansbank’s retail customer base, and 8% growth of new accounts for salaried customers in Qatar. Also in highly competitive Egyptian market, QNB, with a network of 216 branches, has modified their in-house customer profiling tool to provide their clients with customized and best suitable products according to their lifestyle, and hence the bank has been able to achieve a stellar growth in both deposits and retail loans.

Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Initiatives to address environmental challenges: QNB Group has experienced strong movement in the utilities sector across the year, in line with QNB’s 2030 objective to diversify the economy in a sustainable way. Population growth and industrial expansion across Qatar have placed increased pressure on both the water and power supplies in the country as demand continues to rise. For this reason, QNB is closely involved with the Water Security Mega Reservoirs Project, which has the objective to deliver substantial quantities of fresh water without affecting the groundwater reserve of Qatar. In the transportation sector, QNB has signed a landmark deal with Qatar Rail to create a long-standing strategic partnership and QNB is the official acquiring bank for all Travel Card and Fare Media payments. This agreement between QNB and Qatar Rail clearly establishes the bank’s commitment to support the economy of the country by promoting this type of private sector project. QNB’s support for the Qatar Rail project is facilitating a new and sustainable mode of transport for the country that will also bring long-term benefits for the environment. The 2017-19 blockade of Qatar also brought a lot of challenges; including blockade of air, land and sea routes, disruption in food supply, ending various trade ties, diminishing value of country’s real estate, reduction in tourism sector, etc., which Qatar successfully overcame with QNB being instrumental in supporting.

2. Sustainable financial performance: Sustainable finance of QNB Group integrates environmental, social and governance (ESG) criteria into their business and investment decisions for benefits of the clients as well as the whole society. By fostering a financial marketplace that contributes to sustainable development and value creation in economic, environmental and social terms, QNB helps in improving efficiency, prosperity, and competitiveness for all. Sustainable operations of QNB involve managing QNB’s direct ESG impacts, which ensures that the bank operates ethically and efficiently. QNB has introduced a raft of initiatives across the bank to improve their efficiency and reduce their environmental footprint. For example, as per QNB’s 2018 Annual Report; in Egypt QNB offices have started installing solar panels which would allow a saving of around 28% of the annual energy consumption, QNB has installed LED lighting in Qatar offices which has reduced the power consumption and the demand for air conditioning from the resulting reduced heat, also all of QNB’s paper and cardboard waste is recycled to supply the carton packaging industry. In addition, QNB Finansbank has financed twelve renewable energy projects worth over USD350 million to support Turkey’s transition to a more environmentally sustainable and diverse electricity supply which includes six solar, three wind and three hydroelectric power plants. This has resulted in production of 2.8 million MWh per year and a huge reduction of 1.4 million tons of CO2 emission per year. Hence QNB’s disciplined approach to sustainable financing and sustainable operations is the key driver for successful financial performance every financial year.