Qatar National Bank (QNB) reported a 12 per cent rise in first-quarter net profit on Tuesday, fuelled by double-digit loan growth after its takeover of Turkey’s Finansbank.
The 2.7bn euro ($2.86bn) acquisition completed in June helped to secure QNB’s position as the largest lender in the Middle East and Africa by assets, but it also exposed the bank to soured loans in Turkey after the economy wobbled in the wake of last year’s failed coup.
As a result, QNB reported a hefty jump in bad loans to QAR398.93bn ($109.6bn) in the quarter, up from QAR20.12bn a year earlier and lifting its non-performing loans ratio to 1.8 per cent from 1.4 per cent.
QNB, which is 50 per cent owned by the Qatar Investment Authority sovereign wealth fund and is the Gulf’s largest lender, posted a better than expected net profit of QAR3.2bn in the three months to March 31.
Arqaam Capital analysts had forecast a quarterly net profit of QAR3bn.
Loan growth was up 33 per cent year-on-year to QAR536bn, while customer deposits rose by 34 per cent to QAR541bn.
The bank’s loan to deposit ratio stood at 99 per cent, just below the 100 per cent cap set by Qatar’s central bank, which takes effect from the end of 2017.
QNB, which is present in more than 30 countries including its ownership of a business in Egypt and a 23.5 per cent stake in pan-African lender Ecobank International, has also been broadening its horizons in Southeast Asia to boost growth outside its small domestic market.
The bank also began operating in Saudi Arabia capital Riyadh last month, it said, offering wholesale and corporate banking products, including structured and project finance and transaction banking.
QNB was the second Gulf bank to report earnings on Tuesday, with Dubai Islamic Bank (DIB), the United Arab Emirates’ largest sharia-compliant lender, having posted a 4 per cent increase in first-quarter net profit.