Qatar National Bank shrugs off doubts over Qatar's hosting of the 2022 Fifa World Cup, posting profits above analysts' estimates as lending surges.
Qatar National Bank racks up Dh1.8bn in profits
Qatar National Bank (QNB) exceeded analysts' estimates for the second quarter of the year as uncertainty over Qatar's hosting of the 2022 Fifa World Cup proved little impediment to the bank's lending plans.
The country's biggest bank reported profits of 1.8 billion Qatari rials (Dh1.81bn), an increase of 25.8 per cent on the same period last year.
Analysts expected profits of about 1.68bn rials.
Speculation that Qatar could lose out as host of the World Cup came to a head in May amid allegations of vote-buying, but those worries have since subsided.
Despite the uncertainty, the Qatari government's spending plans to prepare for the tournament have so far proved a boon to the bank's profits, said Tarik El Mejjad, a financial analyst at Nomura.
"The bottom line looks good," he said, adding that the concerns remained.
"This growth was mainly driven from public-sector lending, which yields very little," Mr El Mejjad said. "They've had a big drop in yield on assets, which has been offset by cheaper costs of funding. If there were not so much liquidity in the market, this bank would have been hit even more."
QNB, which is 50 per cent owned by the Qatar Investment Authority, is the first Qatari company to post second-quarter earnings.
Net loans and advances increased 6.9 per cent from the end of March to 150.5bn rials, while deposits and unrestricted investment accounts rose 9.1 per cent to 196.3bn rials during the same period.
This week, Deutsche Bank reiterated its "buy" rating on QNB, pointing to high margins and good asset quality.
"Public-sector spending should become stronger as the year progresses and close the year as a major driver of domestic credit growth," analysts from the bank wrote in a research note.
"QNB controls the majority of public-sector loans and deposits. Financial performance is historically very strong and is likely to remain so."
During the quarter, the Qatar central bank also limited the size of loans that could be granted to individuals to 2 million rials and the repayment period to six years.