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UPDATE 1-Commercial Bank of Qatar Q2 net profit dips 3 pct
July 23, 2014 / 1:22 PM / 3 years ago

UPDATE 1-Commercial Bank of Qatar Q2 net profit dips 3 pct

* Q2 net profit 502.6 mln riyals, down 3 pct - Reuters calculations

* Higher costs, provisions overshadow strong loan growth

* 4th quarterly profit decline in last 5 quarters (Adds detail, context)

DUBAI, July 23 (Reuters) - Commercial Bank of Qatar (CBQ) suffered a 3 percent decline in second-quarter net profit, Reuters calculations based on half-year figures from the bank showed on Wednesday, as higher costs and provisions overshadowed strong loan growth.

The bank earned a net 502.6 million riyals ($138.1 million) in the three months to June 30 against 518.2 million in the same period last year, Reuters calculated as the bank did not provide quarterly results breakdown in an earnings statement. It made a net 1.05 billion riyals in the first six months of 2014, up 3 percent on the same period last year, the filing said.

Analysts had on average forecast a quarterly profit of 512.8 million, according to a Reuters poll.

The bank has now reported declining profit in four of the last five quarters, as higher provisioning dragged down earnings.

Impairment allowances in the second quarter totalled 226.7 million riyals, 55.8 percent up on the same period last year, according to Reuters calculations. For the first six months of 2014, impairments totalled 286 million riyals, the statement showed, a 33 percent increase year-on-year.

Meanwhile, operating expenses in the first six months of the year jumped 65 percent year-on-year to 828 million riyals, although the increase was only 11.6 percent when costs associated with Alternatifbank - the Turkish lender which CBQ bought last year - were excluded.

Higher costs and provisioning erased the benefits which CBQ accrued from another quarter of strong lending growth.

Total loans stood at 69.4 billion riyals on June 30, up 4 percent since the start of the year, with lending to government clients, industry and the real estate sector the predominant drivers, the statement said.

CBQ has been rapidly expanding its lending activities in recent quarters as it - like other banks in Qatar - benefit from the billions of riyals being ploughed into the local economy by the government for infrastructure development and preparations for hosting the 2022 soccer World Cup.

Deposits, which have also been growing strongly in recent quarters, stood at 59.8 billion riyals on June 30, up 27.6 percent on the same point of 2013.

$1 = 3.6404 Qatar Riyals Reporting by David French; Editing by David Holmes and David Evans

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