INITIATION
Outshining their peers
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In this report, we re-iterate our overweight view on Qatar and highlight what we
see as an opportunity to invest in the banking sector, which is trading at
historically low valuations and is likely to benefit the most from the structural
growth in the economy. As a result, we initiate coverage of the banking sector
with Outperform ratings on the ‘Qatar-3’: Commercial Bank of Qatar (CBQ),
Qatar National Bank (QNB) and Doha Bank (DBQ). See Figure 1 for details.
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Why Qatari banks?
a) a play on one of the fastest-growing economies in the world;
b) despite the recent rally, valuations remain attractive relative to its GCC peers;
c) strong and substantial government support;
d) among the lowest gearing and the highest capitalisation levels globally;
e) highest profitability and efficiency among GCC peers; and
f) low risk of MTM writedowns and refinancing does not appear to be a concern.
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Main challenges: Real estate exposure is a concern. However, 1) the exposure
is moderate compared with regional and global peers; 2) the Qatari
government’s offer on 28 May to buy US$4.1bn worth of real estate portfolios
should offer support to the sector.
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Our top pick is CBQ, but we like all three banks relative to GCC peers.

Table of contents
Executive summary 3
Valuations 4
Valuation summary—GCC banks 9
Why Qatar? 11
Why Qatari banks? 16
Real estate exposure is a concern 30
Deposit structure 34
Commercial Bank of Qatar COMB.QA 35
Qatar National Bank QNBK.QA 41
Doha Bank DOBK.QA 47