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Large Cap4,023 0.80
Med Cap3,850 0.49
Small Cap4,907 0.91
Micro Cap8,519 0.62

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Ticker Price Volume
GFH 0.46 3,578,848
BKSB 0.14 275,822
DSI 0.39 45,711,538
ALINMA 16.41 24,441,807
DAMAC 3.84 686,475
ALKHODARI 9.95 301,307
DANA 0.6 9,001,191

Doha Bank -Equity Report -09-12-2011

Source: NBK Capital

Loan growth in Qatar continues to be the highest in the GCC, standing at 22% YTD by the end of October 2011. The public sector and the real estate sector accounted for the bulk of the loan growth. We maintain our favorable view of the Qatari banking sector although we think better share price performance and higher valuations for Qatari banks result in only moderate upside potentials compared with Saudi and UAE bank, for example.

Qatari banks increased their operating income by double-digit growth rates in 9M2011 mainly on the back of higher net interest income as the cost of funds continued to decrease in Qatar. Top-line growth filtered down to the bottom line, and all banks witnessed net profit growth in 9M2011 that was similar to their operating income growth. Asset quality indicators generally improved in 9M2011 with nearly flat or decreasing NPL ratios combined with increasing NPL coverage ratios. QNB remained the outperformer with a close to 30% increase in loans, operating income, and net profit in 9M2011.

We have increased our fair value of CBQ by 15% on higher forecasted earnings, and upgraded our recommendation on the stock to “Buy” from “Accumulate” which we believe offers an upside potential of 30%. We have changed our fair values of Doha Bank, QIB, and QNB only slightly (less than 5% each) and we maintain our “Accumulate” recommendation on the three stocks, which we believe offer limited upside potentials of 9%, 8%, and 7%, respectively. We think that QNB’s fundamental strength and superior growth potential are almost fully-priced in. we expect Qatari banks will remain the highest dividend-paying stocks in our coverage universe, and we forecast FY2011 dividend yields of 8.5%, 7.7%, and 6.1% for CBQ, Doha Bank, and QIB, respectively.

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