Based on the strong financial results for 2012 and consistent with QNB Group's aim of maximizing returns to shareholders, the Board of Directors is recommending to the General Assembly the distribution of a cash dividend of 60% of the nominal share value (QR6.0 per share). The financial results for 2012 along with the profit distribution are subject to Qatar Central Bank (QCB) approval.
Key indicators of the 2012 financial results
Robust balance sheet growth
Total assets increased by 21.5% to reach QR367bn, the highest ever achieved by the Bank. This was the result of a strong growth rate of 28.9% in loans and advances to reach QR250bn. Meanwhile, customer deposits recorded a solid growth of 34.9% to QR270bn, resulting in improved liquidity with the loans to deposits ratio reaching 92.6% at year-end 2012. During 2012, the Bank continued to focus on diversifying it sources of liquidity and extending the maturity profile of its funding.
Outstanding assets quality
The Bank was able to maintain the ratio of non-performing loans to total loans at 1.3%, a level considered one of the lowest amongst banks in the Middle East and Africa, mirroring the quality of the Group's loan book and due to the effective management of credit risk. The Group's conservative policy in regard to provisioning continued with the coverage ratio reaching 115% in 2012.
Increased revenues with improved efficiency
Total operating income including share of results of associates increased to QR11.5bn, up by 12.8% compared to 2011, as QNB Group succeeded in achieving strong growth across the range of revenue sources. Net interest income increased by 17.3% to reach QR9.1bn, driven by the impressive 21.5% growth in the balance sheet and the Group's success in maintaining a strong net interest margin (NIM).
QNB Group continued to diversify its income sources, with net fees and commissions and net gain from foreign exchange reaching QR1,305m and QR598m respectively.
The Group's prudent cost control policy and strong revenue generating capability allowed it to maintain its efficiency ratio (cost to income ratio) at 16.8%, which is considered one of the best ratios among financial institutions in the region.
Total Equity increased by 12.6% to reach QR48.0bn as at 31 December 2012. The capital adequacy ratio reached 21.0% at year-end 2012, far higher than the regulatory requirements of QCB and the Basil Committee. The Bank is keen to maintain a strong capitalisation in order to support future strategic plans.
QNB Group was able to record a strong return to shareholders, with the return on average shareholder's equity reaching 20.5% in 2012, while earnings per share increased to QR11.9, compared with QR11.3 in 2011.
High credit ratings
QNB Group's leading role in the banking sector and the high quality of its assets, along with its capabilities to achieve sustained growth in all activities, were demonstrated clearly in its credit rating that was affirmed during 2012 by Capital Intelligence, Fitch, Moody's and Standard & Poor's. QNB Group maintains one of the highest ratings in the Middle East and North Africa (MENA) Region. The Group's ratings were affirmed post the announcement to acquire National Société Générale Bank (NSGB), a reflection of the confidence in its strategy and the management of its expansion plans.
The Group's high credit ratings and outstanding asset quality allowed it to be recognized as one the world's 50 safest financial institutions by Global Finance.
Significant expansion of international presence
During 2012, QNB Group completed a number of transactions to further solidify its presence in the MENA Region. The most significant transaction was the agreement with Société Générale to acquire its full stake of 77.17% in NSGB, the second largest private bank in Egypt.
The Bank has also concluded the acquisition of a 49% stake in the Bank of Commerce and Development in Libya, the country's leading private sector bank. The Group's stake in a number of institutions was also increased. This included increasing ownership in the UAE-based Commercial Bank International (CBI) from 24% to 40% and the Iraq-based Mansour Bank from 23% to 51%.
With operations in 24 countries across Asia, Europe and Africa, the Group is in a strong position to reach its 2017 vision to become a Middle East and Africa Icon.
Successful diversification of funding sources
During 2012, two issuances under the Bank's Euro Medium Term Note Programme (EMTN Programme) were successfully launched each at US$1.0bn, with very attractive rates. As part of ongoing efforts to diversify the investor base, the London Certificates of Deposit (CD) programme was effectively launched during the year. The Bank has successfully closed a US$1.8bn three year term loan facility at competitive rates.
Innovative products and services
During 2012, several new products and services were introduced that were positively received by customers. Among the enhanced mobile banking options launched was the award-winning Tap & Pay payments program, which enables clients to turn their mobile phones into credit cards.
Also, in line with the expanding the range of investment offerings, the Bank launched the QNB Debt Fund and the Brazil, Russia, India, China, and Qatar (BRICQ) Fund, allowing access to emerging markets.
Staff development remains a key priority
The Bank continues to place high emphasis on recruiting Qatari nationals and provide them with dedicated training programs to further enhance their capabilities. During the year, over 250 Qatari staff were recruited resulting in the Bank having a Qatarisation ratio that exceeds 50%, the highest among financial institutions in Qatar.
Currently, nearly 8,800 staff are employed by QNB Group, its subsidiaries and associate companies having a branch network comprising almost 400 branches and offices, with an ATM network that exceeds 800 machines. Upon the completion of the regulatory approvals to acquire NSGB, the number of staff will increase to almost 13,000 with the branch network at more than 560 supported by 1,150 ATM machines.