* Capital-boosting measures may include retained earnings
* No further M&A planned as absorbs Turkey purchase
* Turkey economic turmoil to have no significant earnings
* Cost-cutting, better margins, lower provisions to boost
By David French
DUBAI, Feb 10 Commercial Bank of Qatar
(CBQ) is studying a number of initiatives, including retaining
earnings, to boost its capital base in the next 18 months, its
group chief executive told Reuters.
The second-largest lender by assets in the Gulf Arab state
sold a 2 billion riyal ($549 million) capital-boosting bond in
December, raising its capital adequacy ratio to 13.9 percent
after its reserves had been depleted by high loan growth and its
purchase of a majority stake in Turkey's Alternatifbank.
"There are a number of initiatives which we are analysing to
boost capital in the next 12 to 18 months," Andrew Stevens said.
He wouldn't elaborate further, except to say there would be a
proposal put to shareholders at their next meeting relating to
CBQ will not complete any further acquisitions in the near
future as it integrates the Turkish business into its
organisation, Stevens said in a telephone interview from the
bank's Doha headquarters.
"If you look at our previous acquisitions, it has taken us
two to three years to digest them. This time, it is different as
this is a full-scale consolidation so time is needed to digest,
work out the management strategy and improve the links and
governance standards between the two parts," Stevens said.
CBQ bought a 74.24 percent stake in Alternatifbank during
2013, part of a trend of Gulf banks looking to acquisitions to
diversify their businesses away from competitive home markets.
Since late last year, Turkey has suffered economic
instability, with the lira plunging 10 percent in a
month, as investors worry about the country's current account
deficit and the impact of a wide-ranging corruption probe.
The current Turkish turbulence is "violently disconcerting"
but will have an "immaterial" impact on CBQ's profitability in
2014 as its Turkish business is a small part of the overall
group, Stevens said.
Stevens took up the group CEO role with responsibility for
the bank's international operations in August, when Qatari
Abdulla Saleh al-Raisi was appointed chief executive of the
He said CBQ would focus on cutting its costs and managing
its margins better in 2014, with an expanded retail business and
lower provisioning boosting the bank's earnings.
CBQ reported a 32.9 percent drop in fourth-quarter net
profit earlier on Monday as it was hit by higher provisioning
for non-performing loans.
Stevens said impairments in 2013 were caused by a
revaluation of Indian investments following the depreciation of
the rupee, and provisions against loans to a Qatari real
estate project and an Omani cement factory.
The bank had already provisioned for 10 percent of its Qatar
property loan exposure in its second-quarter earnings, but was
asked to take a further 10 percent impairment by the country's
central bank at the end of the year, Stevens said.
He added he was confident that further provisioning wouldn't
be required as real estate values in Qatar were recovering and
that rental income generated by the project was enough to
service the loan.
Meanwhile, the bank had commenced legal action against the
developers of the unnamed Omani factory to recoup its money. CBQ
had provisioned for 100 percent of the loan, he said.
(Editing by Andrew Torchia)