DOHA: Qatar National Bank (QNB) on Tuesday announced its annual net profit for 2020 reached QR12 billion ($3.3 billion), a decrease of 16 per cent compared to the previous year.
The Group’s operating income increased by 1 per cent compared to last year despite the impact of Covid-19 and the decline in oil prices.
Considering the long-term financial impacts of Covid-19, QNB Group decided to set aside an additional QR5.8 billion in respect of loan loss provisions as a precautionary measure, which affected the net profit for the year.
For the first time in the history of the region, QNB became the first banking institution to record total assets of QR1 trillion ($282 billion), representing an increase of 9 per cent from last year.
The board of directors has recommended to the General Assembly the distribution of a cash dividend of 45 per cent of the nominal share value that equals to QR0.45 per share. The financial results for 2020 along with the profit distribution are subject to Qatar Central Bank (QCB) approval.
Loans and advances
The growth in total assets was mainly driven by strong growth in loans and advances by 7 per cent to reach QR724 billion ($199 billion).
On the funding side, QNB diversified its customer deposits generation which helped to increase deposits by 8 per cent, to reach QR739 billion ($203 billion) from 31 December, 2019.
During the year, QNB Group renewed its drive for cost rationalisation in addition to sustainable revenue-generating sources.
This has helped QNB Group to materially improve the efficiency (the cost to income) ratio from 25.9 per cent to 24.3 per cent, which is considered one of the best ratios among the large financial institutions in the MEA region.
Asset and liability management
QNB strengthened its asset and liability management capabilities helping to reduce its loans to deposits ratio from 99.2 per cent to 98 per cent as at 31 December, 2020, mainly due to conservative credit underwriting during the year and more focus on deposit generation given the current low interest rate environment.
The ratio of non-performing loans to gross loans amounted to 2.1 per cent as of 31 December, 2020, one of the lowest among financial institutions 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 for potential loan losses resulted in the coverage ratio improving to 107 per cent as of 31 December, 2020.
Total equity increased by 2 per cent to reach QR97 billion ($27 billion). Earnings per share reached QR1.19 ($0.33), compared to QR1.45 ($0.40) in December 2019.