Qatar's CBQ reports 33% drop in quarterly net profit

Third successive quarterly decline for Commercial Bank of Qatar in last three months of 2013
Qatar's CBQ reports 33% drop in quarterly net profit
By Reuters
Mon 10 Feb 2014 01:50 PM

Commercial Bank of Qatar, the Gulf Arab state's second-largest lender by assets, reported a third successive quarterly decline in net profit on Monday as higher provisions for bad loans once again hurt its earnings.

The bank made a net profit of QR300 million ($82.4 million) for the final three months of the year, a drop of 32.9 percent compared with QR447.3 million a year earlier, it said in a statement.

Five analysts polled by Reuters had, on average, expected a 5.6 percent decline in quarterly profit to QR422.3 million.

Provisioning in the quarter more than doubled to QR346 million from QR136 million, according to Reuters calculations based on the bank's financial statements.

It is the third quarter in a row that impairment charges have eroded the bank's bottom line; earnings dipped year-on-year in both the second and third quarters of 2013.

Full-year profit for 2013 fell 20.2 percent to QR1.61 billion, with net provisions the primary cause of the decline - they rose to QR714 million from QR202 million in 2012.

The fall in earnings was reflected in the lower dividend proposed by the bank. CBQ's board has recommended a mixture of cash and a bonus share dividend worth 4 riyals per share for 2013, down from the 6 riyals paid in 2012.

The higher impairments overshadowed growth in other areas of the bank, with loans and advances up 38 percent over the course of 2013 to stand at QR66.9 billion on Dec. 31, which the bank attributed to higher lending to the real estate and services sectors.

Banks in Qatar have been benefiting from huge sums being ploughed into the local economy by the government, which is spending billions of riyals on infrastructure development.

Lending across the Qatari banking system grew 11.8 percent year-on-year in December, according to central bank data - the slowest rate since May 2011, but still high compared to most other economies.

Deposits grew 53 percent in 2013 to QR63 billion, supported by the inclusion of QR8.1 billion of deposits belonging to Alternatifbank, the Turkish lender which CBQ bought last year.

In total, Alternatifbank has contributed QR9 million of net profit to the bank's balance sheet since its consolidation into CBQ's results in the second half of last year.

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