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QNB eyes capital-boosting bonds after Q4 profit rise

DUBAI, January 13, 2016

Qatar National Bank (QNB) said on Wednesday it would ask shareholders to approve the issuance of capital-boosting bonds to maintain its reserves above regulatory minimums and support future growth.

It made the announcement as it missed estimates despite reporting a 5.3 per cent increase in fourth-quarter net profit, according to Reuters calculations.

QNB has said it wants to be the largest bank in the Middle East and Africa by the end of 2017. It is currently the second-largest lender in the region by assets, behind South Africa's Standard Bank.

In pursuit of this goal, the bank has made a number of acquisitions in recent years. The latest was an agreement last month to buy Turkey's Finansbank from National Bank of Greece for €2.7 billion.

"The group is keen to maintain a strong capitalisation in order to support future strategic plans," the bank said in its earnings statement.

The lender's board had approved issuing Basel III-compliant bonds that could either enhance its core Tier 1 capital or its supplementary Tier 2 capital.

Shareholders would be asked to approve the plan at their annual general meeting, the statement said without giving a date for the meeting.

QNB's total capital adequacy ratio, a combination of both Tier 1 and 2 capital and a key indicator of the bank's health, stood at 16.3 per cent as at Dec. 31, above the 12.5 per cent minimum prescribed by Qatar's central bank.

The board would determine the size, timing and pricing of any capital-boosting bond issue, the statement added.

When other Qatari banks have issued such bonds in recent years, including Commercial Bank of Qatar and Doha Bank, they have been placed with government entities, rather than sold to international investors.

EARNINGS

QNB reported a net profit of QR2.58 billion ($708.6 million) in the three months to December 31, Reuters calculated. The bank did not provide a quarterly breakdown of its earnings.

The average forecast of three analysts polled by Reuters had been for a profit of QR2.74 billion.

For the full 12 months, net profit in 2015 was up 7.7 per cent to QR11.3 billion, driven by a rise in operating income, the bank said in a statement.

QNB said loans and advances stood at QR388 billion at the end of December, up 14.8 per cent year on year.

Lending growth in Qatar has been a driver of banking profits in recent years, boosted by state spending on infrastructure ahead of the soccer World Cup in 2022.-Reuters




Tags: profit | Qatar National Bank | bonds |

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