Commercial Bank of Qatar is committed to its business in Turkey for “the long haul” as it looks to build its operations there, according to the top executive at the lender.
“We are focusing on building it and improving the return on equity,” group chief executive officer Joseph Abraham said in a Bloomberg TV interview yesterday. 
Commercial Bank has spent the last few years turning the business around, with its non-performing loans better than the market’s average, he said.
Commercial Bank, Qatar’s third-largest lender by assets, took full ownership of Alternatifbank AS in 2016 and undertook several rounds of capital increases since then to support the Turkish unit’s growth plans.
Turkish banks may face an increase in NPLs after extending more credit to keep the economy afloat through currency volatility and lockdown restrictions aimed at slowing the spread of Covid-19. The damage from the pandemic is forcing banks to increase provisioning as they also comply with a regulatory cap on fees and commissions. The outlook for the industry is shifting, however, following a change in policy making last November.
“Turkey had some policy volatility last year,” Abraham said. “Now we’ve seen more reversion to an orthodox policy, which is welcomed by the market and it will also be positive for the banking sector.” 
Alternatifbank is Turkey’s 18th-largest bank, with 49 branches mostly in big cities. 
With the Gulf rift ending, Fitch Ratings predicts Qatari banks could benefit from greater inflows. 
Meanwhile, challenges posed by lower oil prices and economic hardship caused by the coronavirus pandemic may also speed an ongoing wave of bank consolidation across the region.
CBQ fared better than estimated by analysts last year. Net provisions for loans and advances rose to QR836.4 ($229mn).
Provisions are “cautionary buffers, and specific provisions will only emerge in the second half of 2021 once forbearance and support measures are lifted,” Abraham said. He expects a stronger growth outlook for the bank in the second half of 2021 with the vaccine rollout.
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