DUBAI (Reuters) – Qatar National Bank, the Gulf’s largest bank by assets, on Tuesday announced a drop in annual profit of more than 16%, hit by $ 1.6 billion in write-downs over the course of ‘a year in which the region’s economy was hit by the coronavirus epidemic.
Gulf banks have faced a slowdown in business and increased loan write-downs as Covid-19 hit the region. The outlook for 2021 is uncertain due to the protracted nature of the economic recovery.
QNB reported net profit of 12 billion Qatari riyals ($ 3.30 billion) in 2020, it said in a statement, up from 14.4 billion riyals in 2019.
Profit was slightly above the average forecast of 11.7 billion riyals by seven analysts, based on data from Refinitiv.
“Given the long-term financial impacts of Covid-19, the QNB group decided to set aside an additional 5.8 billion (riyals) for loan loss provisions, a precautionary measure, which affected profit. net of the year, ”the bank said. In 2019, write-downs amounted to approximately 3.2 billion riyals.
Qatar’s economy is expected to grow 3% this year, as easing a three-year-old regional dispute will help trade, tourism and logistics, Standard Chartered said on January 6, revising its previous growth estimate. 2.1%.
Saudi Arabia and its Arab allies agreed earlier in January to end a boycott imposed in mid-2017 over allegations that Qatar supports terrorism, charges it has denied.
Qatar’s economy is expected to contract by around 2.5% in 2020, the International Monetary Fund said.
Despite the pandemic, QNB said its total assets reached a record 1,000 billion riyals, thanks to a 7% increase in loans and advances.
QNB improved its cost-to-income ratio from 25.9% to 24.3%, which the bank says is considered one of the highest ratios among large financial institutions in the Middle East region and of Africa.
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Reporting by Saeed Azhar, editing by Louise Heavens and Jane Merriman