(Adds FX loss details, paragraph 5)
By Tom Arnold
DUBAI, Oct 10 (Reuters) - Qatar National Bank’s (QNB) third-quarter net profit rose 3.5 percent, the largest bank by assets in the Middle East and Africa said on Wednesday, as a rise in net interest income helped offset the squeeze from a weaker Turkish lira.
QNB, which is 50-percent owned by sovereign wealth fund Qatar Investment Authority, in 2016 completed the acquisition of Turkey’s Finansbank. Now around 15 percent of QNB’s assets and 14 percent of its loans relate to Turkey, according to Arqaam Capital.
The lira has come under pressure this year as a result of investor concerns about President Tayyip Erdogan’s influence on monetary policy and an ongoing row with the United States that has resulted in reciprocal sanctions and trade restrictions.
The bank said the growth of its assets and liabilities had been partly affected by a weaker Turkish lira.
QNB took a foreign exchange translation loss of 2.97 billion riyals ($815.9 million) during the quarter, which analysts said was likely mainly related to the lira.
QNB’s net profit rose to 3.72 billion riyals in the three months to Sept 30 from 3.60 billion a year earlier, it said.
That was in line with a forecast by SICO Bahrain and topped the 3.64 billion riyals expected by EFG Hermes.
Net interest income grew to 4.72 billion riyals from 4.63 billion riyals in the same period of last year. That helped offset a slight dip in net fees and commission income to 839.2 million riyals, down from 935.1 million riyals in the year earlier period.
The bank aims to increase its profit by 5 to 8 percent this year and loans and investments by 10 to 12 percent, helped by expansion into faster-growing Southeast Asia markets, its chief executive told Reuters in April.
Despite the devaluation impact from the lira, the bank said its loan to deposit ratio rose to 98.3 percent by Sept. 30.
QNB also reported a doubling in net impairment losses on loans and advances to customers to 684.0 million riyals, up from 338.6 million riyals in the same period of last year.
$1 = 3.6400 Qatar riyals Reporting by Tom Arnold; editing by Jason Neely and Kirsten Donovan