* To cut real estate exposure to 16 pct
* To raise exposure to govt and public sector
* Aims to lower bad loan ratio to 2 pct from 5.3 pct
By Tom Arnold
DUBAI, Nov 29 Commercial Bank of Qatar
will cut its exposure to the property market and lend more to
the public sector as it set out a turnaround plan under its new
chief executive aimed at stemming a dismal earnings run as more
The Gulf Arab state's third-largest lender by assets, like
other banks in the region, has seen bad loans rise steeply due
to the fallout of lower oil and gas prices on the wider economy,
which has forced cutbacks in state and consumer spending, as
well as layoffs in a number of industries.
The five-year plan follows a review by its new chief
executive Joseph Abraham, a former Australia and New Zealand
Banking Group banker, aimed at halting five consecutive
quarters of falling profit. The lender reported a near-tripling
of net impairment charges against bad loans to 504.9 million
riyals ($134.62 million) in the third quarter.
The bank said it aimed to cut its non-performing loan ratio
to the market average of 2 percent from 5.3 percent currently.
In a presentation circulated to investors, it expects
further writedowns this year and next, and plans to tighten
underwriting standards and improve asset quality by diversifying
into other sectors and countries.
The bank aims to cut its real estate exposure from 23
percent currently to a maximum of 16 percent, while raising its
share of exposure to the government and public sector from 8
percent now to a minimum of 16 percent.
Arqaam Capital said in a note that it was cutting its
earnings per share forecasts for the bank for the full year of
2016 and 2017 as a result of net interest margin pressure
stemming from the shift from property to public sector lending
and continued writedowns.
Other ratios CBQ said it aimed to boost were its earnings
per share, return on equity, return on assets and Tier 1 level
to the market average of 15.1 percent from the existing 13.6
The bank sought approval this month for a 1.5 billion riyals
rights issue, an action it said in the presentation would raise
its Common Equity Tier 1 ratio, a key measure of a lender's
ability to absorb losses, from the current level of 10 percent.
($1 = 3.7506 riyals)
(Editing by Louise Heavens)