Posted on October 12, 2017

QNB Group, the largest financial institution in the Middle East and Africa (MEA) region, announced its results for the nine months ended 30 September 2017, which is the highest in the history of QNB Group.

Key indicators of the financial results for the nine months ended 30 September 2017 are shown below.

Achieve Sustainable and Robust Growth in Profits

Income Statement
(QAR billion)

Sep-17

Sep-16

Movement

Net Interest Income

13.2

13.6

(3%)

Net Fees and Commission income

2.7

2.7

-

Total Expenses

4.9

5.3

(7%)

Net Profit attributable to Equity Holders

10.3

9.7

6%

Key Performance Indicators

Sep-17

Sep-16

Earnings per Share (QAR)

10.7

10.3

Cost to Income Ratio

29.0%

30.1%

For the nine months ended 30 September 2017, Net Profit increased to QAR10.3 billion, up by 6% compared to last year, demonstrating QNB Group’s success in maintaining robust growth while controlling costs.

The decrease in net interest income was primarily driven by the devaluation of the EGP which took place in late 2016. Had there been no devaluation of the EGP late last year, QNB Group’s financial performance would have been as shown below:

Pro-forma income statement after EGP devaluation impact

(QAR billion)

 

 

Sep-17

 

 

Sep-16

 

 

 Growth

Net Interest Income 

13.2

12.5

6%

Net Fees and Commission income

2.7

2.5

9%

Total Expenses

4.9

4.9

-

The Group’s prudent cost control policy and strong revenue generating capability helped to improve the efficiency ratio (cost to income ratio) to 29% as at 30 September 2017, from 30.1% in September 2016, which is considered one of the best ratios among financial institutions in the region.

Robust and Strong Financial Position

Balance Sheet  (QAR billion)

Sep-17

Sep-16

Growth

Dec-16

Growth

Total Assets

792

713

11

720

10

Loans and Advances

579

507

14

520

11

Deposits

574

501

15

507

13

Equity

77

76

2

 

Total assets reached QAR792 billion, up by 11% from September 2016, the highest ever achieved by the Group. This was driven by a growth rate of 14% in loans and advances to reach QAR579 billion.

Key Performance Indicators

Sep-17

Sep-16

Dec-16

Loan to Deposit Ratio

100.8%

101.3%

102.7%

NPL Ratio

1.8%

1.8%

1.8%

Coverage Ratio

111%

130%

114%

LCR

149%

116%

85%

NSFR

93%

86%

84%

QNB Group was successful in attracting new customer deposits to comply with the cap on loans to deposit ratio of 100% set by QCB, which will be effective from end of 2017. These deposit mobilisation efforts resulted in increased customer funding by 15% to reach QAR574 billion from September 2016. This led to the reduction in the Group’s loan to deposit ratio to 100.8%, compared with 101.3% in September 2016. This clearly demonstrates the success of QNB’s strategy to diversify its funding sources. The Group was able to maintain the ratio of non-performing loans to gross loans at 1.8%, a level considered one of the lowest amongst financial institutional 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 continued with the coverage ratio reaching 111% in 30 September 2017. 

The table below shows the pro-forma financial position of QNB Group, had there been no devaluation of the EGP late last year:

Pro-forma balance sheet after EGP devaluation impact

(QAR billion)

 

 

Sep-17

 

 

Sep-16

 

 

 Growth

Total Assets

792

680

16%

Loans and advances

579

493

17%

Deposits

574

476

21%

Diversified Sources of Liquidity

In September 2017 QNB Group successfully completed the issuance of Formosa bonds under its Euro Medium Term Note (EMTN) programme and listed on the Taipei Stock Exchange. Under this programme, a US$ 630 million tranche was issued with a maturity of 30 years callable every 5 years. The issuance was part of QNB Group’s on-going strategy to ensure diversification of funding in terms of type, tenor and geography. This Reg S issue attracted strong interest from Taiwanese investors. This success is a testament to the trust of international investors in QNB Group’s strategy and the strength of its financial position.

Also the above is an example of a highly diversified international and local funding base spread across various geographies in terms of currencies, tenors and product mix. QNB Group follows a very conservative approach to manage its liquidity needs and a prudent liquidity management programme is in place to address urgent and exceptional business requirements.

Growing International Presence

In July, QNB Group commenced its operations in the city of Mumbai, the economic capital of the Republic of India. This network expansion comes in support of its vision to become a leading bank in the Middle East, Africa, and Southeast Asia by 2020, in addition to establishing a foothold in highly competitive markets. Through its new branch in India, the Group offers a full spectrum of banking products and services. The Group also offers its rich experience in wealth management, investment portfolios, project finance, and the provision of smart banking solutions and a range of innovative products and services designed to suit the requirements of the Indian market.

QNB Group’s presence, through its subsidiaries and associate companies, spans more than 31 countries and 3 continents providing a comprehensive range of products and services.

Exceptional Capital Strengths

Total Equity increased by 2% from September 2016 to reach QAR77 billion as at 30 September 2017. Earnings per Share reached QAR 10.7, compared to QAR10.3 in September 2016. Capital Adequacy Ratio (CAR) calculated as per the QCB and Basel III requirements stood at 15.4%  as at 30 September 2017 (18.0% including profitability up to 30 September 2017), higher than the regulatory minimum requirements of the Qatar Central Bank and Basel Committee. The Group is keen to maintain a strong capitalisation in order to support future growth targets.

Maintain a strong Credit Profile

QNB Group has maintained its position as one of the strongest rated financial institutions in the region. This is a result of QNB Group’s strong financial position, high quality of its assets and its leading position in the financial sector.

Institution of Choice

QNB Group continued to highlight its dedication to high quality service and product offerings. The last nine months witnessed a number of major achievements, for which the Group received numerous prestigious awards, including: “Best Bank in Qatar” by Global Finance magazine, “Best Bank in Qatar” by Asiamoney magazine, and “Best Bank in Qatar” and “Fastest Growing Bank in Qatar” from the Banker Middle East magazine. 

Robust Brand Recognition and High Brand Value

Based on the Group’s continuous strong performance and its diversified international presence, QNB is now the most valuable banking brand in the MEA region, with  the value of its brand increased to USD3.8 billion to rise to the 60th place globally, in addition to attaining the highest rating of AA+ in brand strength, making it the only Qatari banking brand among the world’s top 100.

Enhancements to Compliance Capabilities

QNB Group’s compliance with statutory and regulatory requirements are sustainably achieved by implementing several enhancements to its infrastructure which is a fundamental aspect of achieving the Group’s goals, objectives and expansion strategy. The Training and Awareness methodology has also been enhanced to introduce a new effective approach by conducting onsite trainings to alert all staff on the Money Laundering risks, Reporting of Suspicious Transactions and escalation of suspicious activities. QNB Group Compliance has conducted a number of awareness programmes among the employees at all levels which enables staff to develop responsiveness about the required behaviours and actions which lead to protecting and upholding the best interests of QNB and its customers.  

Ensure Outstanding Talent Pool

QNB continues with its focus on training and development programmes to employees at all levels with an opportunity to develop and identify the top talents within the Group.  Subsequent to the Employment Engagement Survey conducted last year by QNB, several initiatives were undertaken  to improve how employees view and operate within QNB Group. Also QNB has undertaken multiple initiatives to strive towards being recognized as an Employer of Choice by both staff and potential candidates.  QNB continues to place high emphasis on recruiting nationals in all countries in which the Group operates, providing them with dedicated training programs to further enhance their capabilities. This has resulted in the bank having a Qatarization ratio that exceeds 53% in Qatar, the highest among financial institutions in Qatar.

QNB built on the previous successes in its development of Qatari Nationals via targeted deployment to overseas branches and subsidiaries, so as to give the future leaders of the bank a detailed exposure of the countries/markets that we operate in.  During 2017, QNB expanded the scope of this programme to start having Qatari staff permanently deployed in key markets/countries to not only increase the development of the individual, but also strengthen the service provided to Qatari customers and their businesses overseas.        

The total number of staff for the Group is more than 27,800 operating from 1,230 locations and 4,200 ATMs serving more than 21 million customers.

 

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