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Doha Bank

Source: Taib Bank

Quarterly Result Update

Doha Bank reported a total operating income of QAR 1.06 billion for 1H10, down 3.5% YoY.

Net profit declined 4.9% to QAR 614.71 million from QAR 646.35 million in 1H09.

We have revised our FY2010 total operating income estimate downwards by 2.4% in anticipation of lower gains on sale of financial investments. Accounting for this and anticipation of higher provisions for impairment of loans & advances, we have reduced our net profit estimate by 10.1%.

We are maintaining our earlier OVERWEIGHT recommendation on Doha Bank with a revised target price of QAR 68.31, implying an upside of 53.9%.

Net Profit
Weak performance by the bank’s Islamic banking and insurance operations coupled with lower non-interest income and higher operating expenses, dragged net profit down 4.9% during to QAR 614.71 million from QAR 646.35 million. Consequently, the adjusted EPS was down to QAR 6.49 from QAR 6.82 in the year ago period.

We had updated Doha Bank on May 17, 2010 with an OVERWEIGHT recommendation (target price of QAR 74.33 on a 54.2% upside). Currently, the bank’s stock is trading at a P/E multiple of 8.28x and 6.62x on 2010E and 2011E earnings, and at a P/BV multiple of 1.41x and 1.30x on 2010E and 2011E BVPS, respectively. Meanwhile, the stock has lost 5.7% since the beginning of this year as opposed to a decline of 0.6% by the Qatar Exchange’s DSM 20 Index. Considering the above factors, we have arrived at a target price of QAR 68.31, representing an upside of 53.9% over its current price of QAR 44.40 (as on July 26, 2010). Accordingly, we are reiterating our earlier OVERWEIGHT recommendation on Doha Bank.

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