QNB third-quarter profit falls as it books more provisions

DUBAI (Reuters) - Qatar National Bank QNBK.QA, the Gulf's largest lender, saw a roughly 18% fall in its third-quarter profit as it booked more loan loss provisions amid global economic uncertainty.

FILE PHOTO: An artwork depicting Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani is seen on the building of Qatar National Bank in Doha, Qatar January 16, 2018. REUTERS/Stringer/File Photo

Net profit in the third quarter fell to around 3.1 billion riyals ($851.4 million) from 3.8 billion riyals in the same period of 2019, according to Reuters calculations.

The figure was slightly higher than EFG Hermes’ net income forecast of 2.971 billion riyals for the period.

Profit in the nine months ending in September fell 15% year-on-year to 9.5 billion riyals, QNB said on Sunday.

“Due to the current global economic headwinds, QNB Group set aside additional loan loss provisions amounting to QAR 1.9 billion to protect the group from any adverse shocks in the loan book,” the bank said in a statement, adding this had an impact on overall profitability.

Operating income in the first nine months of 2020 rose 1% to 19.2 billion riyals, it said.

Fitch Ratings said in July that Qatari banks’ standalone credit profiles were likely to weaken this year because of the coronavirus crisis and weak oil prices despite support measures introduced by the central bank.

Lower interest rates would hit profitability, as well as lower non-interest income “exacerbated by subdued business volumes and higher loan impairment charges,” it said.

QNB said its non-performing loans ratio amounted to 2% as of Sept. 30, adding that was one of the lowest ratios among financial institutions in the Middle East and Africa.

QNB, which serves more than 20 million customers, is 50% owned by Qatar’s sovereign wealth fund, the Qatar Investment Authority.

It is expected to raise soon a $3.5 billion loan with a group of banks, sources told Reuters last week, to refinance an existing $3.5 billion debt facility the bank raised in 2017 and which is due in December this year.

($1 = 3.6411 Qatar riyals)

Reporting by Yousef Saba and Davide Barbuscia