Commercial Bank of Qatar Financial Results for the nine months ended 30 September 2012
23 October 2012
Commercial Bank of Qatar (“Commercialbank” or “the Bank”) announces its financial results for the nine months ended 30 September 2012.
The Bank delivered strong results which saw net profit increase by 4% to QR 1,565 million compared with QR 1,508 million achieved in the same period in 2011. The profit for the third quarter of 2012 at QR 548 million was in line with the second quarter of 2012 and the third quarter of 2011.
Key financial highlights
His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercial Bank said, “Qatar's economy has grown steadily in the third quarter, although at a slower rate than in the first half of the year, with demand for credit facilities continuing to be mainly from the Public Sector.
Commercial Bank has, however, successfully identified opportunities to grow its loan book and its revenues, delivering strong results for the first nine months of the year. We will look to maintain this momentum for the remainder of 2012.”
Financial Performance
Mr. Hussain Al Fardan, Commercial Bank’s Managing Director, commented on the nine months’ financial performance, “The operating environment in Qatar continues to be challenging but Commercial Bank has delivered a positive performance in the year to date with higher earnings, growth in lending and strong asset quality. The Bank remains well positioned for continued growth in the remainder of the year.”
Net interest income for the nine months ended 30 September 2012 was QR 1.404 billion, 2% lower than the same period in 2011, reflecting growth in lending to customers offset by a reduction in the net interest margin.
The decline in net interest margin is the result of lower average yields from lending due to intense competitive pricing pressure and regulatory changes, which capped pricing for retail products in 2011, partially offset by a reduction in the average cost of funds.
Non-interest income was QR 781 million for the first nine months in 2012 compared with QR 718 million for the same period in 2011 due to higher gains from the Bank’s investment portfolio and an increase in foreign exchange income partially offset by lower levels of net fee and commission income.
Net operating income for the nine months ended 30 September 2012 was QR 2.185 billion, 2% higher than the level achieved in the same period last year.
The Bank’s total operating expenses were up by 14% to QR 709 million compared with QR 622 million in 2011. Staff costs were 9% higher reflecting annual increments for staff and investment in staff training and development. General and Administrative expenses, and Depreciation were also up reflecting continued investment in the development of both the infrastructure and service delivery capability of the Bank.
The Bank’s net provisions for loans and advances were QR 66 million in the nine months ended 30 September 2012, down 46% from QR 123 million provided in the same period for 2011.
Asset quality remains strong with the non-performing loan ratio increasing slightly to 0.90% at 30 September 2012 compared with 0.82% at the end of June 2012.
Provisions for impairment on the Bank’s investment portfolio reduced to QR 35 million for the nine months ended 30 September 2012 compared with QR 43 million for the same period in 2011.
Profit for the nine months ended 30 September 2012 was up 4% to QR 1.565 billion from QR 1.508 billion for the same period in 2011. The net profit for the third quarter was QR 548 million, in line with the profit achieved in the second quarter of 2012 and the third quarter of 2011.
The Bank’s total assets increased by 8% to QR 76.4 billion at 30 September 2012 compared with QR 70.4 billion at 30 September 2011 and were up QR 4.8 billion from 31 December 2011.
The increase in total assets from the end of 2011 was due to growth of QR 6.8 billion in lending to customers and QR 1.5 billion in balances held with the Qatar Central Bank, partially offset by a reduction of QR 4.2 billion in balances due from banks and financial institutions.
Loans and advances to customers were up by 17% to QR 48.4 billion at 30 September 2012 compared with QR 41.5 billion at the end of September 2011 and were up by 16% from 31 December 2011. The growth in lending in 2012 has been generated from both the Corporate and Retail businesses.
Financial investments reduced to QR 11.6 billion at 30 September 2012, 1% lower than at the end of December 2011. The decrease since the end of 2011 reflects, mainly, the maturity of Government Bonds and Qatar Central Bank Certificates of Deposits offset by investment in Qatar Central Bank Treasury Bills.
Customers’ deposits were QR 41.7 billion at 30 September 2012, an increase of 13% compared with the end of September 2011, and up QR 3.7 billion since 31 December 2011.
In February the Bank repaid a syndicated loan facility of USD 650 million whilst arranging a new USD 455 million term loan with a club of international banks. In April the Bank issued USD 500 million five-year unsecured fixed rate notes in the international capital debt markets under its Euro Medium Term Note Programme.
The Bank’s capital position remains strong with the capital adequacy ratio at 17.4% as at 30 September 2012 compared with 17.9% at the end of 2011, well above the Qatar Central Bank’s required minimum level of 10%.
Andrew Stevens, Commercial Bank’s Group Chief Executive Officer, said “Commercial Bank has maintained the progress seen in the first half of the year to deliver a record nine month profit at 30 September 2012. The market has been subdued in the third quarter growing at a lower level than in the first half of the year. However, we have continued to grow and diversify our loan book during this period whilst ensuring our risk management remains vigilant.
Our affiliated banks in Oman and the UAE have, again, delivered outstanding financial performances for the nine months with strong growth in profitability and lending.
For the remainder of 2012, we will continue to focus on growing our domestic corporate and retail businesses, developing the strength of our regional alliance and delivering solid returns to our shareholders.”
Associates
NBO’s net profit after tax grew by 12% to RO 30.5 million for the nine months ended 30 September 2012 compared with RO 27.3 million for the same period in 2011.
Operating income grew by RO 4.2 million to RO 73.9 million from RO 69.7 million in 2012 due, mainly, to higher net interest income up 12% to RO 50.0 million compared with RO 44.6 million in 2011 reflecting both growth in lending and a reduction in the cost of funds.
The net impairment losses for 2012 were RO 4.6 million, RO 2 million lower than in the same period in 2011 with the non-performing loan ratio improving to 2.72% at 30 September 2012 from 2.94% at 31 December 2011.
During the nine months, loans and advances to customers grew by 18% to RO 1.9 billion from RO 1.6 billion at 30 September 2011 whilst customers’ deposits were up by RO 0.4 billion to RO 1.9 billion at 30 September 2012.
UAB delivered a record nine months’ net profit of AED 298 million, up 32%, from AED 225 million in the nine months ended 30 September 2011 reflecting increased operating income which was up 33% to AED 551 million in 2012.
The increase in operating income reflected higher net interest income, up 34%, to AED 407 million and growth of 30% in non-interest income to AED 145 million due to growth in the Corporate and Retail businesses.
Provision for credit losses increased to AED 85 million compared with AED 57 million for the nine months ended 30 September 2011 due, in part, to the implementation of the revised provisioning guidelines issued by the UAE Central Bank.
Loans and advances to customers grew by 31% to AED 10.0 billion at 30 September 2012 and deposits were up 29% to AED 8.7 billion compared with the end of September 2011.
The Bank delivered strong results which saw net profit increase by 4% to QR 1,565 million compared with QR 1,508 million achieved in the same period in 2011. The profit for the third quarter of 2012 at QR 548 million was in line with the second quarter of 2012 and the third quarter of 2011.
Key financial highlights
- Net profit up 4% to QR 1.565 billion
- Total assets up 8% to QR 76.4 billion
- Customer loans and advances up 17% at QR 48.4 billion
- Customers’ deposits up 13% to QR 41.7 billion
- Earnings per share of QR 8.43 compared with QR 8.25
His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercial Bank said, “Qatar's economy has grown steadily in the third quarter, although at a slower rate than in the first half of the year, with demand for credit facilities continuing to be mainly from the Public Sector.
Commercial Bank has, however, successfully identified opportunities to grow its loan book and its revenues, delivering strong results for the first nine months of the year. We will look to maintain this momentum for the remainder of 2012.”
Financial Performance
Mr. Hussain Al Fardan, Commercial Bank’s Managing Director, commented on the nine months’ financial performance, “The operating environment in Qatar continues to be challenging but Commercial Bank has delivered a positive performance in the year to date with higher earnings, growth in lending and strong asset quality. The Bank remains well positioned for continued growth in the remainder of the year.”
Net interest income for the nine months ended 30 September 2012 was QR 1.404 billion, 2% lower than the same period in 2011, reflecting growth in lending to customers offset by a reduction in the net interest margin.
The decline in net interest margin is the result of lower average yields from lending due to intense competitive pricing pressure and regulatory changes, which capped pricing for retail products in 2011, partially offset by a reduction in the average cost of funds.
Non-interest income was QR 781 million for the first nine months in 2012 compared with QR 718 million for the same period in 2011 due to higher gains from the Bank’s investment portfolio and an increase in foreign exchange income partially offset by lower levels of net fee and commission income.
Net operating income for the nine months ended 30 September 2012 was QR 2.185 billion, 2% higher than the level achieved in the same period last year.
The Bank’s total operating expenses were up by 14% to QR 709 million compared with QR 622 million in 2011. Staff costs were 9% higher reflecting annual increments for staff and investment in staff training and development. General and Administrative expenses, and Depreciation were also up reflecting continued investment in the development of both the infrastructure and service delivery capability of the Bank.
The Bank’s net provisions for loans and advances were QR 66 million in the nine months ended 30 September 2012, down 46% from QR 123 million provided in the same period for 2011.
Asset quality remains strong with the non-performing loan ratio increasing slightly to 0.90% at 30 September 2012 compared with 0.82% at the end of June 2012.
Provisions for impairment on the Bank’s investment portfolio reduced to QR 35 million for the nine months ended 30 September 2012 compared with QR 43 million for the same period in 2011.
Profit for the nine months ended 30 September 2012 was up 4% to QR 1.565 billion from QR 1.508 billion for the same period in 2011. The net profit for the third quarter was QR 548 million, in line with the profit achieved in the second quarter of 2012 and the third quarter of 2011.
The Bank’s total assets increased by 8% to QR 76.4 billion at 30 September 2012 compared with QR 70.4 billion at 30 September 2011 and were up QR 4.8 billion from 31 December 2011.
The increase in total assets from the end of 2011 was due to growth of QR 6.8 billion in lending to customers and QR 1.5 billion in balances held with the Qatar Central Bank, partially offset by a reduction of QR 4.2 billion in balances due from banks and financial institutions.
Loans and advances to customers were up by 17% to QR 48.4 billion at 30 September 2012 compared with QR 41.5 billion at the end of September 2011 and were up by 16% from 31 December 2011. The growth in lending in 2012 has been generated from both the Corporate and Retail businesses.
Financial investments reduced to QR 11.6 billion at 30 September 2012, 1% lower than at the end of December 2011. The decrease since the end of 2011 reflects, mainly, the maturity of Government Bonds and Qatar Central Bank Certificates of Deposits offset by investment in Qatar Central Bank Treasury Bills.
Customers’ deposits were QR 41.7 billion at 30 September 2012, an increase of 13% compared with the end of September 2011, and up QR 3.7 billion since 31 December 2011.
In February the Bank repaid a syndicated loan facility of USD 650 million whilst arranging a new USD 455 million term loan with a club of international banks. In April the Bank issued USD 500 million five-year unsecured fixed rate notes in the international capital debt markets under its Euro Medium Term Note Programme.
The Bank’s capital position remains strong with the capital adequacy ratio at 17.4% as at 30 September 2012 compared with 17.9% at the end of 2011, well above the Qatar Central Bank’s required minimum level of 10%.
Andrew Stevens, Commercial Bank’s Group Chief Executive Officer, said “Commercial Bank has maintained the progress seen in the first half of the year to deliver a record nine month profit at 30 September 2012. The market has been subdued in the third quarter growing at a lower level than in the first half of the year. However, we have continued to grow and diversify our loan book during this period whilst ensuring our risk management remains vigilant.
Our affiliated banks in Oman and the UAE have, again, delivered outstanding financial performances for the nine months with strong growth in profitability and lending.
For the remainder of 2012, we will continue to focus on growing our domestic corporate and retail businesses, developing the strength of our regional alliance and delivering solid returns to our shareholders.”
Associates
NBO’s net profit after tax grew by 12% to RO 30.5 million for the nine months ended 30 September 2012 compared with RO 27.3 million for the same period in 2011.
Operating income grew by RO 4.2 million to RO 73.9 million from RO 69.7 million in 2012 due, mainly, to higher net interest income up 12% to RO 50.0 million compared with RO 44.6 million in 2011 reflecting both growth in lending and a reduction in the cost of funds.
The net impairment losses for 2012 were RO 4.6 million, RO 2 million lower than in the same period in 2011 with the non-performing loan ratio improving to 2.72% at 30 September 2012 from 2.94% at 31 December 2011.
During the nine months, loans and advances to customers grew by 18% to RO 1.9 billion from RO 1.6 billion at 30 September 2011 whilst customers’ deposits were up by RO 0.4 billion to RO 1.9 billion at 30 September 2012.
UAB delivered a record nine months’ net profit of AED 298 million, up 32%, from AED 225 million in the nine months ended 30 September 2011 reflecting increased operating income which was up 33% to AED 551 million in 2012.
The increase in operating income reflected higher net interest income, up 34%, to AED 407 million and growth of 30% in non-interest income to AED 145 million due to growth in the Corporate and Retail businesses.
Provision for credit losses increased to AED 85 million compared with AED 57 million for the nine months ended 30 September 2011 due, in part, to the implementation of the revised provisioning guidelines issued by the UAE Central Bank.
Loans and advances to customers grew by 31% to AED 10.0 billion at 30 September 2012 and deposits were up 29% to AED 8.7 billion compared with the end of September 2011.