x Abu Dhabi, UAEWednesday 17 January 2018

QNB posts big gain to open earnings season

Lender's profit rose by 38 per cent for second quarter

Qatar National Bank (QNB) got the earnings season off to a positive start yesterday, beating the analysts' consensus forecast for its results by 10 per cent. The bank reported a second-quarter profit of 1.44 billion rials, up 38 per cent compared with the same period last year and 14 per cent more than the previous quarter. The bank is Qatar's largest lender by assets. Launched in 1964, half of the bank is owned by the Qatar Investment Authority and the other half is publicly traded. The stock has risen steadily for the past three months and yesterday added another 0.4 per cent to 136.10 rials.

Credit Suisse maintains a rating of "outperform" on the QNB shares with a "fair value" price of 146.15 rials, even though the shares trade at a premium of 57 per cent to its peers. "We remain convinced that it has the highest asset quality in the GCC region," said Mohammed Hawa, an analyst at Credit Suisse, who is based in London. Total income for QNB grew 11 per cent compared with the previous quarter, to 1.8bn rials, and interest income is helping to widen its margins. Its fee income has been "buoyant", Mr Hawa said, up 18.6 per cent in the second quarter from last year.

The bank's loan-to-deposit ratio has decreased and the deposit base remains strong. Its loan book was flat at 117.6bn rials, while deposits grew 5 per cent in the latest period compared with last year. The bank's loan-loss provisions for the second quarter came in at 97m rials, up 5 per cent against the previous quarter, but were down 9 per cent from the same period last year. Separately, QNB's chief executive, Shareef al Emadi, told Bloomberg the bank planned to increase its presence by opening four branches in Oman, 15 in Syria and five in Sudan this year. QNB already has three branches in Syria, one in Oman and one in Sudan.