Result helped by SWF declining to take dividends
Qatari lender adds to market woes
Doha Bank yesterday was the latest of several Qatari banks to disappoint the market. Net income fell 5.4 per cent to 299.7 million rials for Qatar's third-largest bank by revenue, from 316.7m rials a year earlier, the bank said in a financial statement posted on the Qatar Exchange. The results were helped considerably when the country's sovereign wealth fund declined to take dividends.
"We think the operating results for Qatari banks in general are far from ideal as the significant growth in nominal GDP is not yet being filtered into the balance sheets of local banks. We thus highlight marginal, or 5 per cent, downside risk to our full-year estimates for Doha Bank," said Mohamed Hawa, a banking analyst based in London at Credit Suisse. The bank increased its non-performing loan ratio to 3.8 per cent in the second quarter but the ratio remains relatively low, Mr Hawa said in a note.
The Qatar Investment Authority (QIA), holder of 5 per cent of the bank's share capital, relinquished its right to dividends, amounting to 43.1m rials. "That 43m has given a boost," said Janany Vamadeva, an analyst at HC Brokerage in Dubai who forecast second-quarter profit of 239m rials. Doha Bank is the second-worst performing lender after Qatar Islamic Bank on the Qatar Exchange Index of Qatari companies this year. Even so, it has benefited from Qatari government support following the global economic crisis.
The bank said it received a 368.6m rial capital injection from the QIA late last year. The government also agreed to purchase the equity and property portfolio of Doha Bank and other Qatari lenders. Doha Bank may raise as much as US$1 billion by selling bonds in the fourth quarter, its chief executive Raghavan Seetharaman said last month. Doha Bank remained unchanged at 44.1 rials on the Qatar exchange yesterday. It is down 6.4 per cent this year.
* with Bloomberg