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Qatar National Bank Announces Results

3/12/2002

Doha, Qatar - 12 March, 2002 (PRN):2001 was another successful year for Qatar National Bank, with record profits and earnings per share. Net profit rose by 7.4% to QR 527.3 million, compared with QR 491 million in 2000.

Highlights:
Net profit up by QR 36.3 million (7.4%) to QR 527.3 million ($144.9 million)
Total assets up by QR 3.8 billion (15%) to QR 28.4 billion ($7.8 billion)
Deposits up by QR 3.2 billion (18%) to QR 21.4 billion ($5.9 billion)
Shareholders' funds totaled QR 4.7 billion ($1.3 billion)
Risk Asset Ratio at 41%, compared with Qatar Central Bank requirement of 10%, and Basle minimum stipulation of 8%
Efficiency ratio (costs to income) strong at 28.4% (2000: 28.6%)
Earnings per share up from QR 4.7 to QR 5.1

Net interest income increased by QR 62.5 million (10%) to QR 690.5 million. This increase was generated during a period of declining interest rates and spreads and therefore reflected the Bank's strenuous efforts to generate significant additional quality business against this lower interest rate background.

Other operating income grew by QR 25.3 million (22%) to QR 142.2 million. This increase was particularly encouraging as it was a key aim at the beginning of 2001 to deliver strong growth in other operating income in order to mitigate the impact of reduced spreads on net interest income. Accordingly, the Bank's ratio of non-interest income to total income grew from 15.7% in 2000 to 17.1% in 2001, and it is one of the Bank's principal goals to see this ratio increase significantly in the coming years.

Total costs, excluding Community Support, increased by QR 23.2 million (11%) to QR 236.2 million. Staff related costs grew by QR 7.5 million (5%) to QR 144.8 million and the controlled increase in staff costs, in comparison with the increase in operating profit, reflected the Bank's aim of the optimal utilisation of its valuable staff resources. Other general and administrative expenses grew by QR 15.6 million (20%) to QR 91.5 million, a key factor of which was the QR 4.5 million increase in depreciation and other direct IT expenditure resulting from the significant investment the Bank is making in its IT systems.

The Bank's efficiency ratio, being total costs as a percentage of income, improved from 28.6% in 2000 to 28.4% in 2001.

Net provisions for the impairment of loans were QR 63.7 million, QR 32 million higher than in 2000. QR 21 million of this increase was due to lower recoveries than in 2000, with QR 2.4 million being due to an increase in other general provisions for loan impairment. The increase was not therefore a reflection of deteriorating credit quality during the year. Credit quality remains high, with the ratio of the Bank's non-performing loans as a percentage of total loans and advances improving from 2.6% in 2000 to 1.9% in 2001.

2001 saw the implementation of International Accounting Standard (IAS) 39 dealing with the accounting treatment and disclosure of financial instruments.

Balance Sheet Growth

During 2001, the Bank's total assets increased by QR 3.8 billion (15%) to QR 28.4 billion, with total deposits increasing by QR 3.2 billion (18%) to QR 21.4 billion. The Bank's advances to deposits ratio stood at 89% at 31st December 2001, and the Bank now operates with optimal levels of liquidity resulting from the eradication of the tight liquidity situation, which was for so long a predominant feature of the Qatari banking system.

Capital Strength

Total shareholders' equity at 31st December 2001 was QR 4.7 billion (US$1.3 billion) and the Bank now ranks 282nd in the world (up 14 places from the previous year) in The Banker top 1000 banks for 2001. In addition the Bank ranks 39th in the world in terms of capital strength as measured by its equity to assets ratio. The Bank's risk assets ratio is 41%, comfortably in excess of the minimum level of 8% stipulated in the Basle capital adequacy directives and the 10% minimum level set by Qatar Central Bank.

Shareholder Value

The Bank's return on shareholders' equity improved from 12.6% in 2000 to 13.1% in 2001. Earnings per share improved from QR 4.7 to QR 5.1. The Bank's express aim is the strong growth in shareholder value as measured by these key indicators and this growth remains the platform upon which the Bank's long-term future will be built.

For more information, contact:

Sadek Karam
Senior Manager - Corporate Communications
Tel: + (974) 4407800
Fax: + (974) 4407801
Mobile: + (974) 5867419
Email: sadek.karam@qatarbank.com
http://www.qatarbank.com