Mideast’s Biggest Bank Raised Provisions and Remains on Alert
(Bloomberg) -- Qatar National Bank QPSC braced for credit losses by boosting the amount of money set aside in provisions and signaled caution over the main international markets where it has a presence.
The Middle East’s biggest bank booked 7.1 billion riyals ($1.9 billion) in loan-loss provisions during 2021, up 21% from the previous year, according to a statement on Tuesday. Total assets rose about 7% to 1.1 trillion riyals.
The Doha-based bank said it “remains cautious on the external environment with respect to potential risks that may arise from key markets where QNB Group operates.”
Many banks in the Gulf are seeing higher profits on the back of improvements in trade and tourism as regional economies recover from the pandemic. Qatar’s outlook for 2022 has also brightened thanks to higher energy prices and the possible boon to business from the soccer World Cup.
Beyond Qatar, QNB has operations stretching from Turkey, Egypt and India to France. Turkey, where the Qatari bank owns QNB Finansbank, made up 9.6% of its loans in September, down from 10.4% in 2020, according to Bloomberg Intelligence.
Turkey has seen its currency weaken to historic lows throughout December, fueled by fears that President Recep Tayyip Erdogan’s push for lower interest rates would stoke inflation. Turkish authorities have since unrolled a series of measures to support the lira.
“While the headline results missed our expectations, we note that this is almost entirely driven by higher” loan-loss provisions, Citigroup Inc. analyst Rahul Bajaj said in a research note. Much of the increase in the charges appears “to be used for building provision coverage.”
- QNB’s 2021 net income rose to 13.2 billion riyals from 12 billion riyals a year ago
- Estimate 13.45 billion (range 13.05 billion to 13.94 billion) (Bloomberg Consensus - 3 estimates)
- Operating income 28.3 billion riyals; estimate 27.33 billion (range 26.57 billion to 27.84 billion)
- Dividend per share 0.55 riyals
- Coverage ratio increased to 117% from 107%
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