Commercial Bank of Qatar reported a 29 percent increase in third-quarter profit, beating analysts’ estimates, as the Persian Gulf country’s second-biggest lender reduced provisions and increased interest income.

Net income for the three months ended Sept. 30 jumped to 508 million riyals ($140 million) from 394.5 million riyals a year earlier, the Doha-based bank said in an e-mailed statement on Tuesday. The median estimate of six analysts was for a profit of 423 million riyals, according to data compiled by Bloomberg.
Commercial Bank may report a “slight increase” in full- year earnings, Chief Executive Officer Andrew Stevens said in a phone interview on Tuesday. “As we are taking advantage of the recovering global situation, these are being manifested in the profit and loss numbers,” he said.
Qatari banks, which suffered losses related to the global economic slowdown, have benefited from a pickup in the economy. Bank lending rose 19 percent and customer deposits increased 23 percent in August from a year earlier, according to central bank statistics. Qatar National Bank SAQ, Qatar’s biggest lender, posted a 37 percent jump in third-quarter profit.
The International Monetary Fund forecasts Qatar’s gross domestic product to grow 16 percent this year. The expansion comes as Qatar, holder of the world’s third-largest gas reserves, raises its annual capacity to liquefy natural gas to 77 million tons.
--------------Provisions, interest income
Commercial Bank reduced impairment provisions to 81 million riyals in the first nine months of this year from 108 million riyals a year earlier, the lender said. Net interest income for the period rose 5 percent 1.25 billion riyals.
“We have seen a further general improvement in asset valuations in the third quarter although pressure remains on certain investment categories,” the bank said in the statement. “That has resulted in an increase of 8 million riyals in impairment provisions in the third quarter compared to the second quarter.”
The lender cut net provisions for loans and advances to 57 million riyals for the nine months from 289 million riyals a year ago. Commercial Bank recovered 75 percent from a corporate default last year that the lender set aside 170 million riyals to cover, Stevens said.
“The bank performed better than expected because it reversed provisioning related to its corporate accounts,” Sofia El Boury, a banking analyst at Shuaa Capital PSC, said in a telephone interview. “The bank is having good balance sheet growth that allows it to generate higher returns.”
Loans and advances increased 10 percent to 34.7 billion riyals at the end of September, while customer deposits rose 4 percent to 31.9 billion riyals, the bank said. Non-performing loan ratio rose to 2.96 percent from 2.67 percent at the end of June “mainly due to additional corporate accounts being classified as NPLs during the quarter,” the bank said.
Commercial Bank doesn’t plan to sell bonds this quarter or acquire companies, Stevens said.
(Source: Bloomberg)