Qatar National Bank -Equity Report -21-06-2012

12-Month Fair Value: QR 158.70
Recommendation: Buy – Risk Level**: 2

We upgrade our recommendation on QNB from “Accumulate” to “Buy” as we have increased our fair value by 8%, while the stock price decreased by 4% since our last update in December 2011. The increase in fair value is driven by a 6% average increase in net profit over the forecast horizon. QNB is our top pick, which we believe offers an upside potential of 21%, and deserves to trade (2012 P/B of 1.9x) at a premium to its peers. QNB, now the biggest bank in the GCC following exponential growth over the past few years, remains a growth stock with limited downside risks. Following significant outperformance in 2011, QNB’s stock continues to fare better than its Qatari peers, as the stock decreased by a limited 5% YTD, compared with 19% and 13% for CBQ and Doha Bank. We forecast QNB will post the highest net profit growth in 2012 at 13%, and to further increase its market share in Qatar on the back of public sector-driven credit growth, QNB’s niche market.