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By Tom Arnold
DUBAI, April 11 (Reuters) - Qatar National Bank (QNB) reported a 12 percent rise in first-quarter net profit on Tuesday, fuelled by double-digit loan growth after its takeover of Turkey's Finansbank.
The 2.7 billion euro ($2.86 billion) acquisition completed in June helped to secure QNB's position as the largest lender in the Middle East and Africa by assets, but it also exposed the bank to soured loans in Turkey after the economy wobbled in the wake of last year's failed coup.
As a result, QNB reported a hefty jump in bad loans to 398.93 billion riyals ($109.6 billion) in the quarter, up from 20.12 billion riyals a year earlier and lifting its non-performing loans ratio to 1.8 percent from 1.4 percent.
QNB, which is 50-percent owned by the Qatar Investment Authority sovereign wealth fund and is the Gulf's largest lender, posted a better than expected net profit of 3.2 billion riyals in the three months to March 31.
Arqaam Capital analysts had forecast a quarterly net profit of 3 billion riyals.
Loan growth was up 33 percent year on year to 536 billion riyals, while customer deposits rose by 34 percent to 541 billion riyals.
The bank's loan to deposit ratio stood at 99 percent, just below the 100 percent cap set by Qatar's central bank, which takes effect from the end of 2017.
QNB, which is present in more than 30 countries including its ownership of a business in Egypt and a 23.5 percent stake in pan-African lender Ecobank International, has also been broadening its horizons in Southeast Asia to boost growth outside its small domestic market.
The bank also began operating in Saudi Arabia capital Riyadh last month, it said, offering wholesale and corporate banking products, including structured and project finance and transaction banking.
QNB was the second Gulf bank to report earnings on Tuesday, with Dubai Islamic Bank (DIB), the United Arab Emirates' largest sharia-compliant lender, having posted a 4 percent increase in first-quarter net profit. ($1 = 0.9425 euros) ($1 = 3.6398 Qatar riyals)
Editing by David Goodman