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Fundamental View
AS OF 22 Aug 2024Qatar National Bank (QNB) is considered a quasi-sovereign entity due to its state ties and ownership. It dominates the domestic market with over a 53% share in total assets, far surpassing the market share of many leading banks in their respective countries.
As the largest bank in the Gulf Cooperation Council (GCC) region by total assets, QNB has shown a strong performance in its net interest margin, cost-to-income ratio, and return on equity (ROE). Its credit is also supported by solid capital adequacy ratios and steady loan growth.
The bank’s liquidity coverage ratio is adequate at 146%, although it has been volatile. Liquidity risk is moderate, given the bank’s loan-to-deposit ratio is nearly 100%, compared to a safer metric of 80% or below seen in regional peers such as UAE banks.
Business Description
AS OF 22 Aug 2024- QNB is the largest bank in the six-state Gulf Cooperation Council (GCC) region. Listed on the Qatar Stock Exchange, the State of Qatar owns more than 50% stake in QNB through its sovereign wealth fund, the Qatar Investment Authority (QIA).
- QNB constitutes the majority of the Qatari banking system and serves as the principal provider of credit and liquidity to the local economy.
- The bank's operations are segmented into domestic Corporate Banking, Consumer Banking, Asset Management and Wealth Management divisions, as well as International operations.
- QNB operates in more than 28 countries, with a significant presence in Turkey and Egypt through its subsidiaries QNB Finansbank and QNB Al Ahli, respectively.
Risk & Catalysts
AS OF 22 Aug 2024Qatar’s economic fundamentals are robust, endowed with the world’s largest reserves of liquefied natural gas (LNG). The economy is well positioned amid the current geopolitical climate. However, sovereign borrowing has been declining, creating a negative volume driver for QNB.
QNB’s asset quality is better than major peers in the GCC region, though it falls short compared to Asian banks in terms of gross NPL ratios, loan loss coverage, and credit costs.
The bank benefits from geographical diversification, with a presence in 28 markets that account for 21% of its loan portfolio. Nonetheless, it has significant operations in Egypt and Turkey, which are subject to high financial and geopolitical risks.
Key Metric
AS OF 22 Aug 2024| QAR mn | 2Q24 | Y23 | Y22 | Y21 | Y20 |
|---|---|---|---|---|---|
| Return on Equity | 18.8% | 17.8% | 17.5% | 17.1% | 16.1% |
| Total Revenue Margin | 3.1% | 3.2% | 3.0% | 2.6% | 2.6% |
| Cost/Income | 23.9% | 20.3% | 20.0% | 22.5% | 24.4% |
| CET1 Ratio | 15.0% | 16.0% | 14.6% | 14.2% | 14.0% |
| Liquidity Coverage Ratio | 185% | 206% | 104% | 147% | 164% |
| Gross NPL Ratio | 2.9% | 3.0% | 2.8% | 2.3% | 2.1% |
CreditSight View Comment
AS OF 20 Mar 2024The interdependence and the state’s ownership stake effectively make Qatar National Bank (QNB) a quasi-sovereign entity. The largest bank in the MEA region’s robust and low-risk balance sheet underpins our view that it is a solid credit. Qatar is the world’s largest exporter of liquefied natural gas (LNG) and the current geopolitical tension could further strengthen its position. The bank retains exposure to Turkey, where asset quality ratios have been improving.
Recommendation Reviewed: March 20, 2024
Recommendation Changed: March 21, 2019
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