QNB expansion helps to push profit up by 15%

Qatar National Bank's profits grew more than 15 per cent in the second quarter of the year as the biggest bank in Qatar extended its international reach across the Middle East¿s frontiers.

Profit at Qatar National Bank (QNB) grew more than 15 per cent in the second quarter of the year as the biggest bank in Qatar extended its reach across the Middle East.

QNB generated an increase in profit of 16.7 per cent to 2.1 billion riyals (Dh2.11bn) for the second quarter, compared with the same period last year. The results were slightly below analysts' estimates of 2.16bn riyals.

As the largest lender to Qatar's government, QNB's profits have swelled as the country expands its natural gas-fuelled economy and overhauls its infrastructure.

Loans and advances have grown by 20.9 per cent to 234.6bn riyals since the start of the year as Qatar's preparations for hosting the 2022 Fifa World Cup kick into gear.

In the same six month period, deposits swelled by 22.8 per cent to 245.9bn riyals as corporate coffers swelled with receipts from the country's growing natural gas exports.

QNB completed two acquisitions during the quarter, expanding its exposure to Libya and Iraq.

In April, QNB took control of Al-Mansour Bank, based in Iraq, as it increased its stake from 23.1 per cent to 50.8 per cent in a 425.4 million riyals deal.

The initial holding was the result of a joint venture with MerchantBridge, a troubled private-equity firm that has faced a string of lawsuits and an uncertain future.

The same month, QNB acquired a 49 per cent stake in Bank of Commerce & Development of Libya.

However, a deal to purchase Denizbank, the Turkish arm of the stricken Franco-Belgian lender Dexia, failed to materialise during the quarter.

The bank was ultimately sold to Russia's Sberbank for US$3.5 billion (Dh12.85bn) last month.

As the first of the Gulf lenders to report quarterly earnings, QNB is closely watched by analysts for signs of the performance of the wider economy.

However, analysts from Deutsche Bank wrote in a research report this week that Qatari banks lending to the private sector are likely to experience muted demand for credit as government spending crowds out other firms.

"Sector data from the central bank shows that public sector credit demand was strong between March and May 2012, growing by 25 per cent in just two months. Total loans rose 9.1 per cent in the same period, but have shown virtually no growth outside the public sector," said the report.

twitter: Follow and share our breaking business news. Follow us

iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.