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Tue 19 Jan 2010 09:19 AM

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Commercial Bank of Qatar reports 33% rise in Q4 profit

Lender sees strong results despite taking QR170m corporate default hit.

Commercial Bank of Qatar reported a 33 percent rise in fourth quarter net profit, despite taking a QR170m hit related to a corporate default, which the lender intends to recover.

Qatar's third-largest bank by market value posted a net profit of QR186m in the fourth quarter from QR140m in the same period in 2008.

The bank's earnings missed analysts' profit forecasts of QR333m.

Net profit for the full year amounted to QR1.5bn, a decrease of 12 percent from QR1.7bn of the year before, and the bank said it would propose a 6 riyals dividend per share, compared to QR7 in the previous year.

"The bank never faced as many challenges as it did over the last 12 months. We've taken provisions against both the lending portfolios and the investment book...in lending we've seen one large corporate failure of 170 million," chief executive officer Andrew Stevens told Reuters by telephone from Doha.

Stevens declined to identify the company, but said it was based in Qatar.

The bank had already warned that it would set aside QR50m against a corporate default and now raised that provision to QR170m. The bank will pursue the recovery of losses stemming from the QR170m default, Stevens said.

"We will exercise every available opportunity to recover that money. If that means through legal recourse we will take that, if it means taking assets we will do that. I remain optimistic that we will make the recovery at some point," he said.

Most Qatar banks have benefited from a lack of significant exposure to two troubled Saudi conglomerates and Dubai World's debt troubles, as well as from government measures to shore up the state's banking sector.

Qatar's sovereign wealth fund took a 5 percent stake in listed banks' capital in December, the second stage of a move announced in 2008 by the Qatar Investment Authority (QIA) to buy 10-20 percent of listed banks' capital.

Stevens said the bank would continue to benefit from strong economic growth in Qatar in 2010. The cash-rich Gulf nation's economy grew 11 percent in 2009, mainly due to its natural gas sector. Qatar is the world's largest exporter of liquefied natural gas.

"Whilst we are optimistic about our prospects for 2010, I think we are also realistic. We see recovery in the bank's performance led primarily by existing strong domestic franchises and reflecting the forecasted growth in the local economy," Stevens said.

"The region is still poised to grow - we're quite bullish about that," he said.

On Monday, Qatar Islamic Bank saw fourth-quarter net profit drop 23 percent, shy of analysts expectations.

Meanwhile, Qatar National Bank reported fourth-quarter profit of QR1.07bn last week, partly due to higher net interest income and financing activities.

Last November, Commercial Bank Qatar raised $1.6bn in bonds, and said it would use the funds to refinance debt and fund future expansion.

"We have a capital adequacy ratio of above 18 percent which will underpin the banks growth structure for the next 2 to 3 years," Stevens said. "We're very confident about the quality of our asset base -- we've taken provisions where we needed to." (Reuters)

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