QNB
QNBK
QNBK
MubasherTrade revealed in recent research that Qatar National Bank (QNB) posted a net profit of QAR2.93 billion in Q3 2014, up 23.9% YoY (+11.2% QoQ) on higher operating income and lower provisioning. This came 13.9% higher than market consensus of QAR2.58 billion. Operating income was up 10.2% YoY (+3.8% QoQ), driven by both net interest income (NII) and non-interest income. NII was up 7.2% YoY (+3.3% QoQ), while non-interest income was up 23% YoY (+5.8% QoQ) on higher FX gains and fees & commissions. Net interest margin (NIM) was slightly up QoQ at 2.65% versus 2.61% in Q2 2014.
QoQ, deposits grew faster than loans:
Loans growth slowed in Q3 2014, only up 0.7% QoQ, while deposits were up 2%, implying a loans-to-deposits (L/D) ratio to 93% in September 2014 from 95% in June 2014. Mubasher believes the slowdown in loans growth was due to slower public lending in the banking sector. Indeed, public-sector loans dropped 3.9% in August 2014 vs. June 2014). The research unit note that QNB's highest loan exposure is to the public sector with 52.8% of total loans were to the government and government agencies in Q2 2014.
Loan provisioning down significantly with comfortable NPL coverage:
Loan provisioning was down 86.2% YoY in Q3 2014 (-75.8% QoQ). Non-performing loans (NPLs) ratio remained stable at 1.6%, while NPL coverage increased to 124% in September 2014 from 119% in Q3 2013 and 123% in Q2 2014. The bank's capital adequacy ratio (CAR) slipped to 15.0% from 15.9% in Q2 2014 (yet up from 14.6% in Q3 2013). However, it remains above the Qatar Central Bank (QCB) requirement of 12.5%.
Lower provisions in 2014 to support earnings growth:
In view of a slow lending environment in Qatar, Mubasher believes QNB is benefiting off the excessive provisioning built in 2013, with NPL coverage having been above 120% throughout last year. Thus, it expects provisioning charges in 2014 to remain below 2013, thus pushing profitability higher. Mubasherd note that QNB is currently trading at 2015e PBV of 2.2x, a 8.5% premium over other Qatar banks' 2.0x which can be justified by QNB's larger size.
QoQ, deposits grew faster than loans:
Loans growth slowed in Q3 2014, only up 0.7% QoQ, while deposits were up 2%, implying a loans-to-deposits (L/D) ratio to 93% in September 2014 from 95% in June 2014. Mubasher believes the slowdown in loans growth was due to slower public lending in the banking sector. Indeed, public-sector loans dropped 3.9% in August 2014 vs. June 2014). The research unit note that QNB's highest loan exposure is to the public sector with 52.8% of total loans were to the government and government agencies in Q2 2014.
Loan provisioning down significantly with comfortable NPL coverage:
Loan provisioning was down 86.2% YoY in Q3 2014 (-75.8% QoQ). Non-performing loans (NPLs) ratio remained stable at 1.6%, while NPL coverage increased to 124% in September 2014 from 119% in Q3 2013 and 123% in Q2 2014. The bank's capital adequacy ratio (CAR) slipped to 15.0% from 15.9% in Q2 2014 (yet up from 14.6% in Q3 2013). However, it remains above the Qatar Central Bank (QCB) requirement of 12.5%.
Lower provisions in 2014 to support earnings growth:
In view of a slow lending environment in Qatar, Mubasher believes QNB is benefiting off the excessive provisioning built in 2013, with NPL coverage having been above 120% throughout last year. Thus, it expects provisioning charges in 2014 to remain below 2013, thus pushing profitability higher. Mubasherd note that QNB is currently trading at 2015e PBV of 2.2x, a 8.5% premium over other Qatar banks' 2.0x which can be justified by QNB's larger size.
Source:
Mubasher Exclusive
