QNB posts 10% jump in 2016 profit to QR12.4 billion. QNB has reported a 10% jump year-on-year in net profit to QR12.4bn for the year ended 2016, helped by stronger core earnings. The country’s largest lender has recommended a total 45% dividend (35% cash and 10% bonus stocks) to shareholders in view of the robust financial results. The dividends would have to be approved by the shareholders as well as the Qatar Central Bank (QCB). Net interest earnings soared 40% to QR17.8bn, net fee and commission income by 54% to QR3.5bn and net gain on foreign exchange by 36% to QR1bn, thus resulting in a 42% surge in operating income to QR23.1bn during 2016.
“2016 was another year of outstanding performance, the best absolute results in QNB Group’s history. The acquisition of Turkey’s Finansbank (now rebranded as QNB Finansbank) during the year helped QNB Group strengthen its position as the largest financial institution in the Middle East and Africa region (MEA) with total assets of QR720bn,” a QNB spokesman said. During 2016, QNB Group completed the acquisition of 99.88% stake in QNB Finansbank, for €2.71bn. This acquisition is a “significant” milestone in QNB’s strategy of international expansion, the spokesman said.
The banking giant’s non-performing loans stood at 1.8% during the year ended 2016, a level considered one of the lowest amongst banks in the MEA region, reflecting the high quality of the group’s loan book and the effective management of credit risk. The group’s conservative policy in regard to provisioning improved the coverage ratio to reach 114% as of December 31, 2016 compared to 127% the previous year.
QNB’s prudent cost control policy and strong revenue generating capability allowed it to maintain an efficiency ratio (cost-to-income ratio) of 30.4%, considered one of the best ratios among financial institutions in the region. It was 21.5% in 2015. Total equity increased 14% to QR71bn and earnings-per-share reached QR14.4 at the end of December 31, 2016 against QR13.4 in the previous year. Despite a turbulent macroeconomic environment and high currency volatility in its core markets, the bank’s capital adequacy ratio stood at 16% during 2016, higher than the regulatory minimum requirements of the QCB and the Basel committee.
“The group is keen to maintain a strong capital ratio in order to support future strategic plans,” the spokesman said. During 2016, QNB had raised QR10bn in additional Tier I perpetual capital notes through private placement to enhance its capital adequacy and support future growth. Year 2016 saw QNB close the syndication of its €25bn three-year senior unsecured term loan facility and also complete the $1bn bond issuance under its Euro Medium Term Note programme in the international capital markets, maturing in five years with an attractive fixed coupon of 2.125% per annum. This demonstrated diversification of funding.