Commercial Bank of Qatar Financial Results for the year ended 31 December 2015

 

Doha, Qatar: The Commercial Bank Q.S.C. (“Commercial Bank” or “the Bank”) announced today its financial results for the year ended 31 December 2015. The Bank delivered a net profit of QAR 1,458 million for 2015, a  24.9% decrease in profitability compared to 2014.  On a quarterly basis, Commercial Bank generated net profit of QAR 117 million in the fourth quarter 2015, as compared to QAR 387 million in the fourth quarter 2014.

 

The Board of Directors is recommending, for approval at the Annual General Assembly on 16 March 2016, a cash dividend payout of QAR 3 per share. The financial results and profit distribution are subject to the approval of the Qatar Central Bank.

 

 

•    Net operating income up 1.2% to QAR 3,949 million

•    Net profit down  24.9% to QAR  1,458 million

•    Total assets up 6.7% to QAR 123.5 billion

•    Customer loans and advances up 5.6% to QAR 76.6 billion

•    Customers’ deposits up 13.4% to QAR 69.8 billion

•    Earnings per share of QAR 4 

•    Commitment from Qatari government entity to Tier 1 QAR 2 billion capital raise

 

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Despite concerns over the global economy, Qatar’s economy remains robust, backed by the country’s strong reserves and the government’s commitment to planned non hydro-carbon projects.  The review of major government projects ahead of last year’s drop in the price of oil, instigated by our leader, HH The Emir Sheikh Tamim bin Hamad Al Thani, means that Qatar is in a strong position to continue the diversification of its economy.  This national strategy provides Commercial Bank with a wide range of opportunities to generate value for its customers and shareholders, whilst supporting the development of the economy, as it has done for the past 40 years.”

 

Financial Performance
 

Mr. Hussain Al Fardan, Commercial Bank’s Vice Chairman and Managing Director, added, “Commercial Bank reported a net profit of QAR 1.46  billion for the full year 2015.  Our financial results for the year were affected by slowing economic growth in our markets in addition to higher than average provisioning taken by our UAE associate.  However, the fundamentals of our business remain strong and our strategy firm: to continue to build upon our 40 year heritage, further developing a financial institution designed to meet our customers’ changing needs.”

 

Net operating income increased by 1.2% to QAR 3,949 million for the year ended 31 December 2015, up from QAR 3,902 million achieved in 2014. ABank delivered net operating income of QAR 711.6 million for the year ended 31 December 2015 which represents 18% of the total net operating income.

 

Net interest income was QAR 2,534 million for the year ended 31 December 2015, 1.8% lower than in 2014, as tightening liquidity and asset yields compressed margin. ABank contributed QAR 499.5 million, 19.8% of the total net interest income. Net interest margin decreased marginally to 2.48% as compared to the third quarter of 2015 at 2.51%.

 

Non-interest income was up 7% to QAR 1,415 million for the year ended 31 December 2015 compared with QAR 1,322 million in 2014 with ABank contributing QAR 212 million. The overall increase in non-interest income was due to higher net fee and commission income and foreign exchange income which were partially offset by lower income from investments securities.

 

Total operating expenses were up  5.2% to QAR  1,705 million for the year ended 31 December 2015 compared with QAR 1,620 million in 2014. The increase in operating expenses was due to higher staff costs, professional fees and occupancy costs.

 

The Bank’s net provisions for loans and advances were QAR 814 million for the year ended 31 December 2015, up 30.7% from QAR 623 million provided in 2014. The non-performing loan ratio has increased to 4.17% at 31 December 2015 compared with 3.82% at the end of December 2014 and the coverage ratio has decreased to 70.8% as at December 2015 compared to 74.3% in December 2014.

 

Impairment provisions on the Bank’s investment portfolio reduced to QAR 46.5 million for the year ended 31 December 2015 compared with QAR 50 million in 2014.

 

Commercial Bank delivered balance sheet growth of 6.7% at the end December 2015 with total assets at QAR 123.4  billion, compared to QAR 115.7 billion at the end of December 2014.  ABank contributed QAR 16.5 billion of assets for the period.  Balance sheet growth was driven mainly by an increase in lending to customers and financial investments.

 

Loans and advances to customers were up by 5.6% to QAR 76.6 billion at 31 December 2015 compared with QAR 72.5 billion at the end of December 2014. The growth in lending since December 2014 has been generated mainly in the Services, Real Estate and Retail sectors.

 

Investment securities were up by 36.4% to QAR 15.8 billion at 31 December 2015 compared with QAR 11.6 billion at the end of December 2014. The increase in investment securities is mainly due to purchase of Government debt security.

 

Customers’ deposits increased by 13.4% to QAR 69.8 billion at 31 December 2015, compared with QAR 61.6 billion as at 31 December 2014. The increase in deposits was mainly due to an increase in time deposits.  This reflects our strategy to ensure continued diversification of our funding base in tight liquidity conditions.

 

Mr. Abdulla Saleh Al Raisi, Commercial Bank’s Chief Executive Officer, commented, “Our markets have proved challenging during the course of the year, as economic growth slowed amidst concern over the prospects of the global economy.  2016 will likely be a challenging year as the world adjusts to lower oil prices, increasing interest rates and slower rates of growth from China. However, Commercial Bank is well-positioned to generate value and we are optimistic about the long term prospects for the Bank.” 

 

He added, “The Qatari economy continues to diversify and grow, which provides us with lots of opportunity to develop by offering innovative services and solutions to our clients, whether they be government, private companies or individuals. Over the course of the year, the Commercial Bank team has made significant advances in the development of both its wholesale and retail banking offers. Our strong liquidity position has also allowed us to support the growth of our subsidiary bank in Turkey, as we participated in its USD 125 million subordinated loan offer.  In addition, we have secured a commitment from a Qatari government entity to subscribe to our QAR 2 billion unsecured perpetual non-cumulative Additional Tier I notes.  The Additional Tier 1 issuance demonstrates our strategy for securing capital in the long term.”

 

 

Alternatifbank (“ABank”) delivered a net profit of TL 95.7 million for the year ended 31 December 2015 (TL 139 million for 2014).

 

Net operating income grew by TL 69 million to TL 579 million for the year ended 31 December 2015, from TL 510 million in 2014, mainly due to an increase in net interest income and net fees and commission income. As at 31 December 2015, ABank had grown its customer lending by 20% to TL 10.1 billion and customers’ deposits decreased by 5.5% to TL 5.7 billion compared with 31 December 2014.

 

 

National Bank of Oman

National Bank of Oman (“NBO”) achieved a net profit of OMR 60 million for the year ended 31 December 2015 as compared to OMR 50 million, an increase of 20% over 2014. Net operating income grew by OMR 22 million to OMR 136 million, from OMR 114 million in 2014, mainly due to an increase in net interest income which was up 13.5% to OMR 92 million. As at 31 December 2015, NBO grew its customer lending by 9.4% to OMR 2.5 billion and customers’ deposits increased marginally to OMR 2.25 billion compared to 2014.

 

United Arab Bank

United Arab Bank (“UAB”) delivered a net loss of AED 166 million for the year ended 31 December 2015 which represents a decrease of 127% over 2014. The net operating income for the year ended 31 December 2015 decreased by 11.6% to AED 1,213 million, from AED 1,373 million in 2014, due to the underlying performance from both Net Interest Income and Non-Interest Income, down 2.2% and 38% respectively, as compared to 2014. UAB’s loans and advances decreased by 12.7% to AED 15.7 billion as at 31 December 2015, with customers’ deposits at AED 16.8 billion, down 10% compared to 2014.