Qatar Nat'l Bank Q3 dips as fees down, provisions up

RESULTS WATCH: QNB made a net profit of QR3.13bn in the first nine months of the year, a rise of 4.1 percent.(Getty Images)

Qatar National Bank posted a 7.5 percent decline in third-quarter profit on lower fee income and a tenfold rise in provisions, but earnings exceeded most analysts' forecasts as net interest income surged.

Net profit in the three months to Sept 30 fell to 1.06 billion riyals ($291.1m) from 1.14 billion riyals in the year-earlier period, it said in statement on Wednesday.

QNB is the first big bank in the Gulf Arab region to report its quarterly results, and is closely watched for indications of the sector's performance.

Investors are looking for any signs of recovery as the cost of the credit crisis mounts and worries persist about exposure to two heavily indebted Saudi conglomerates.

QNB made a net profit of 3.13 billion riyals in the first nine months of the year, a rise of 4.1 percent

Analysts had forecast an average third-quarter net profit of 1.2 billion riyals in a Reuters poll.

"The better-than-expected results are because of net interest income and credit expansion in the public sector," said Vishnu Kant, senior analyst at Sico Investment Bank, which forecast net profit of 1 billion riyals.

Net interest income climbed 22 percent to 860.9 million riyals in the third quarter.

"These results are a positive sign for Qatari banks. In general, we expect a positive surprise in asset quality among Qatari banks ... We don't think it will deteriorate further."

Third-quarter income from fees fell to 230.1 million riyals from 275.5 million in the year-earlier period, while the bank took 10 times more provisions in the third quarter than in 2008, rising 104.8 million riyals, its income statement showed.

"There is a possibility there will be a reversal in provisions in the next quarter," Kant said. "The asset quality in general is very good."

Loans and advances rose 3 percent to 93.8 billion riyals from the year-earlier period.

Shares in QNB on Wednesday closed flat on the Qatar Exchange, which ended 0.37 percent down. The results were announced after trading hours.

QNB, half owned by the sovereign wealth fund Qatar Investment Authority (QIA), has been expanding abroad and has a presence in countries including Syria, Jordan and the United Arab Emirates.

It sold 34 percent of its Syrian subsidiary through an initial public offering in August.

The QIA came to the help of local banks in 2008, saying it would buy 10-20 percent of listed banks' capital.

The Gulf Arab state said on Monday it had bought 5 percent in 2008 and planned to buy another 5 percent in December.

Qatar, the world's largest exporter of liquefied natural gas, is set to be the fastest-growing economy in the Middle East region this year. Its minister of state for energy and industry affairs said in February the economy would expand 10 percent in real terms. ($1=3.641 riyals) (Reuters)

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