Qatar's banks are tipped to report record profits for 2011 this week as the country reaps the benefits of its investment in liquefied natural gas and prepares the groundwork for hosting the 2022 Fifa World Cup.
A burst of government investment expected to total US$140 billion during the next 10 years, excluding investment in the oil and gas sector, proved a boon for the country's lenders last year.
Analysts are now expecting a boost in fourth-quarter profits for much of Qatar's banking sector, which reports earnings this week and next, after strong results from Qatar National Bank last week.
Qatar's biggest lender reported fourth-quarter earnings of 2bn rials, a rise of 34.9 per cent compared with the fourth quarter of 2010, beating analysts' estimates.
Commercial Bank of Qatar (CBQ) is worth a look, said Raj Madha, a financial analyst at Rasmala Investment Bank. The country's second-biggest lender by market value trades at a discount to many of its peers and is expected to increase lending to Qatar's public sector despite a slight slowdown in the third quarter.
"CBQ remains our preferred choice because we believe it has decent growth prospects, strong profitability on new business and trades at a discount to peers under our coverage," he wrote in a research report.
Banks may report some lost income during the fourth quarter after a salary increase for Qatari nationals of up to 60 per cent, the report said. However, the impact of a Qatar central bank directive to split Islamic and conventional lending may be less than earlier feared, the report added.
Analysts polled by Bloomberg News expect fourth-quarter profit of 445 million rials at CBQ, representing a 44 per cent increase on the same period in the previous year. Meanwhile, Qatar National Bank (QNB) has resumed its international expansion efforts with the announcement of a planned acquisition in Morocco.
The bank's stock slid in trading yesterday after the announcement of a partnership agreement with Union Marocaine des Banques, ahead of a planned acquisition of a majority stake in the Moroccan lender. QNB fell 0.1 per cent to 146.6 rials.