Qatar National Bank said it expects to meet its earnings targets as the ongoing Saudi-led campaign to ‘isolate’ the country has minimal impact on its operations.
The Middle East’s largest lender by assets is confident it will reach its net profit growth target of 6% to 8% in the second quarter, the same guidance given to investors in March, according to a senior official at the bank who asked not to be identified because of company policy.
QNB has a good capital base, diversified funding sources and one of the best cost-to-income ratios; so the standoff isn’t impacting the bank’s ability to get funding from the international market, the official said.
Saudi Arabia, Bahrain, Egypt and the UAE cut diplomatic relations and closed transport routes three weeks ago, falsely accusing the nation of funding terrorism, which it denies. Some banks in these countries cut their exposure to Qatar, while lenders in the country are boosting interest rates on dollar deposits to shore up liquidity, people familiar with the matter said.
The embargo hasn’t stopped QNB from processing transactions with its affiliates in Egypt and the UAE. The business in the UAE is a small part of the bank’s total revenue, while Egypt contributes 7% to net income and 5% of assets, the official said.
Only 4% of QNB’s deposits come from the Gulf states involved in the blockade and the bank has seen minimal withdrawals, the official said. The Qatari government and local investors started injecting cash at the beginning of the year, he said.
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