QNB
QNBK
QNBK
EFG - Hermes stated in a recent company note that it has raised Qatar National Bank (QNB) fair value (FV) from QAR211/shr to QAR245.2/shr, implying 18% upside to the current share price.
Meanwhile , EFG raised QNB's earnings estimates by c3% in 2014-16 in addition to reiterating its earlier Buy recommendation.
Despite slowing loan growth, QNB remains EFG's preferred Qatari banking sector play. Its ROE, of c20%, in 2014-16 is strong in the context of Qatar, and is less prone, in our view, to downside risks than other Qatari banks, for which we see headwinds to provisioning (Doha) or net interest margins (Doha, CBQ). Furthermore, QNB currently sources c26% of its earnings from international operations, with the largest one being Egypt, where EFG's see loan growth improving and cost of risk normalizing in the next two years.
QNB bought a 23.5% stake in Pan African Ecobank last September. While buying minority stakes has not been the preferred strategy for QNB, the deal is in line with its target of becoming the leading bank in MENA and Africa by 2017, added EFG.
EFG believes QNB will pursue further inorganic expansion, and the group has highlighted Turkey as a key market. Its CAR of 15% is sufficient for organic growth, but a large acquisition would necessitate further capital. While this might pose a concern with regard to ROE, we note that QNB has a strong track record of preserving shareholders’ returns.
Meanwhile , EFG raised QNB's earnings estimates by c3% in 2014-16 in addition to reiterating its earlier Buy recommendation.
Despite slowing loan growth, QNB remains EFG's preferred Qatari banking sector play. Its ROE, of c20%, in 2014-16 is strong in the context of Qatar, and is less prone, in our view, to downside risks than other Qatari banks, for which we see headwinds to provisioning (Doha) or net interest margins (Doha, CBQ). Furthermore, QNB currently sources c26% of its earnings from international operations, with the largest one being Egypt, where EFG's see loan growth improving and cost of risk normalizing in the next two years.
QNB bought a 23.5% stake in Pan African Ecobank last September. While buying minority stakes has not been the preferred strategy for QNB, the deal is in line with its target of becoming the leading bank in MENA and Africa by 2017, added EFG.
EFG believes QNB will pursue further inorganic expansion, and the group has highlighted Turkey as a key market. Its CAR of 15% is sufficient for organic growth, but a large acquisition would necessitate further capital. While this might pose a concern with regard to ROE, we note that QNB has a strong track record of preserving shareholders’ returns.
Source:
Mubasher Exclusive
