CBQ's shares retreat on Tuesday, analyst says "not too many positives' in the bank's Q4 results

Shares in CBQ end the trading session 0.83 percent lower, after dropping more than 4 percent earlier in the session

  
Qatar Commercial Bank's head office building is seen in Doha November 29,2009.

Qatar Commercial Bank's head office building is seen in Doha November 29,2009.

REUTERS/Fadi Al-Assaad

Shares in Commercial Bank of Qatar (CBQ) slipped on Tuesday, after the bank announced its fourth quarter (Q4) 2018 earnings.

CBQ recorded a net profit of 403.57 million Qatari riyals ($110.84 million) in Q4 2018, compared to 344.67 million Qatari riyals in Q4 2017, translating into a 17.1 percent increase. Yet despite the strong headline increase, many performance metrics were weaker.

“CBQ’s Q4 2018 earnings growth was driven by reversal of some impaired assets. In addition, the bank’s lending book and deposit book contracted, along with NIM (net interest margin) contraction,” Chiro Ghosh, research manager at Bahrain-based bank SICO told Zawya by email.

Customer deposits dropped by 3.57 million Qatari riyals in Q4 2018, while loans and advances dropped by 1.08 million Qatari riyals. Net interest margin in Q4 2018 dropped to 2.1 percent, compared to 2.3 percent in Q4 2017.

“There are not too many positives in the Q4 2018 results, except cost optimistation,” SICO’s Ghosh added.

The bank’s board of directors recommended a full year 2018 dividend per share of 1.5 riyals per share up from 1 riyal per share in 2017, translating into a dividend yield of 3.7 percent.

For the full year 2018, CBQ recorded a net profit of 1.66 billion Qatari riyals, compared to 603.6 million Qatari riyals a year ago, a 175.29 percent increase.

The bank’s operating profit rose by 5.9 percent during the year 2018, to 2.34 billion Qatari riyals and total assets amounted to 135.1 billion Qatari riyals, down 2.4 percent year-on -year.

“Although the bank has managed to clean up much of its legacy non-performing loans, we are keeping a close eye on its large past due but not impaired/stage 2 loan basket,” Ghosh ended.

The bank’s shares ended the day 0.83 percent lower, recovering from a drop of more than 4 percent reached earlier in the day's trading session, dragging Qatar’s index to close 0.11 percent lower. So far this year, the bank’s shares have gained 6.47 percent.

According to data from Eikon, four analysts have a ‘hold' rating on the bank's stock and three other analysts have a ‘sell’ rating.

A Thomson Reuters index of Qatari banks shows that the sector has gained 1.51 percent since the start of the year, while the overall Qatari index has risen by 3.79 percent.

Elsewhere in the region, Dubai’s index rose 0.54 percent on Tuesday, Abu Dhabi’s index edged 0.18 percent higher, Saudi Arabia’s index gained 1.13 percent at 3.50pm GST, while Kuwait’s premier market index added 0.47 percent, Bahrain’s index gained 0.44 percent and Oman’s index ended the day mainly flat.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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