The Commercial Bank (P.S.Q.C.) Announces Net Profit of QAR 855 Million for the Half Year Ended 30 June 2018

Doha, Qatar: The Commercial Bank (P.S.Q.C.) (“the Bank”), its subsidiaries and associates (“Group”) announced today its financial results for the half year ended 30 June 2018. The Group reported a net profit of QAR 855 million as compared to QAR 180 million for the same period in 2017, an increase of 376%. 

• Total assets of QAR 139.9 billion, up by 4.8% 

• Customer loans and advances of QAR 87.2 billion, up by 4.3% 

• Customer deposits of QAR 75.1 billion, up by 1.0%

• Operating profit of QAR 1.2 billion, up by 12.3% 

• Cost income ratio of 33.9% reduced from 38.9% 

• Provisions on loans and advances to customers QAR 462 million, 

   down by  51.9% 

• Net profit of QAR 855 million, up by 376% 

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “The Qatari economy remains extremely resilient, demonstrating sustained GDP growth with Fitch and Moody’s upgrading Qatar’s outlook from negative to stable. In this, the second year of our five year plan, the Bank has made very good progress in reshaping its business for sustained growth. As Commercial Bank’s activities closely align with the strategic economic objectives of the nation, our Bank is well positioned to benefit from the resilience and growth of the economy.

Mr. Hussain Al Fardan, Commercial Bank’s Vice Chairman, added, “This quarter, the Bank continues to position itself to show significant improved bottom line performance in coming years. For example, the Bank achieved a successful issuance of a USD 500 million bond as part of the Bank’s European Medium Term Note (“EMTN”) Programme. The bond issuance was twice oversubscribed, a clear indication of the confidence of international investors in the strength and stability of Qatar’s economy, and a testament to the growth prospects of Commercial Bank, underpinned by its strategy, financial strength and prudent management.

Net operating income for the Group increased by 3.7% to QAR 1,833 million for the half year ended 30 June 2018, up from QAR 1,767 million achieved in the same period in 2017.  

Net interest income for the Group increased by 8.2% to QAR 1,328 million for the half year ended 30 June 2018 compared to QAR 1,228 million achieved in the same period in 2017, driven mainly by strong loan growth. Net interest margin is 2.3% for the half year, an increase of 0.1% compared to H1 2017. 

Non-interest income for the Group decreased by 6.5% to QAR 504 million for the half year ended 30 June 2018 compared with QAR 539 million for the same period last year. The overall decrease in non-interest income was mainly due to lower income from investment securities as equity holdings were scaled down in line with the strategic plan and lower foreign exchange income.

Total operating expenses were tightly managed at a Group level, down 9.7% to QAR 620 million for the half year ended 30 June 2018 compared with QAR 688 million for the same period in 2017. Costs reductions were primarily driven by lower staff and administrative expenses.

The Group’s net provisions for loans and advances decreased by 51.9% to QAR 462 million for the half year ended 30 June 2018, from QAR 962 million for the same period in 2017. The non-performing loan (NPL) ratio decreased to 5.39% in the half year ended 30 June 2018 compared to 5.64% for the same period in 2017. The loan coverage ratio is maintained at 84.2% in the half year ended  30 June 2018 compared to 84.3% for the same period in 2017. 

The Group delivered balance sheet growth of 4.8% for the half year ended 30 June 2018 with total assets at QAR 139.9 billion, compared to QAR 133.4 billion for the same period in 2017. Total asset growth was driven mainly by an increase of QAR 3.6 billion in loans and advances and QAR 2.9 billion in investment securities.

The Group’s loans and advances to customers increased by 4.3% to QAR 87.2 billion for the half year ended 30 June 2018 compared with QAR 83.6 billion for the same period in 2017. The growth in lending has been generated mainly from the semi-government and services sectors.

The Group’s investment securities increased by 15.2% to QAR 21.7 billion for the half year ended 30 June 2018 compared with QAR 18.8 billion for the same period last year. The increase is mainly in Government bonds. 

The Group’s customer deposits increased by 1.0% to QAR 75.1 billion for the half year ended 30 June 2018, compared with QAR 74.4 billion for the same period last year.

Mr. Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “The benefits of our 5-year strategic plan and its continued execution are evident in our H1 2018 results, with a consolidated operating profit of QAR 1.21 billion and a net profit of QAR 855 million, representing a 12% and a 376% increase over the same period last year, respectively. 

“As advised previously  we have completed the majority of the legacy loan book provisioning and the lowered credit charge has benefited our bottom line. More importantly, during the first half of the year we continued to grow our business with a focus on the government and  service sector, while also maintaining a tight focus on efficiency and driving down our cost to income ratio. We continue to introduce new and innovative products in retail banking as part of our digital agenda, most notably with the rollout of our “60 Second” remittance service, which allows customer to send funds to home countries in under a minute, and is now been deployed to five countries. 

“In recognition of this initiative we were awarded the ‘Best Remittance Bank in the Middle East’ by the Asian Banker which again shows our focus on building new fee based income streams.

“Consolidated net interest income increased to QAR 1.33 billion during H1 2018, up 8% compared with QAR 1.23 billion during the same period last year. Loans and advances were up 4% to QAR 87.2 billion in H1 2018, driven by growth in the services and industries sectors. Government loans contracted due to repayment of loans post the State of Qatar bond issue but net of this adjustment the govt sector grew by 30%. Customer deposits were up 1% to QAR 75.1 billion in H1 2018, compared to the same period last year. Growth was driven by the Domestic Bank and supplemented by Alternatif Bank’s strong top-line performance. Growth in the Domestic bank was largely due its strong market position and brand recognition in Qatar.

 

“The Domestic Bank reported an increase of 5% in Net Interest Income to QAR 1.11 billion in H1 2018, supported by 4% growth in loans and advances compared to the same period last year and customer deposits remained stable at QAR 64.4 billion. 

“The strategy to more closely align Alternatif Bank with the group continues to yield results. Alternatif Bank reported an increase in operating profit to QAR 147 million  after adjusting for a one off exchange gain of 53  million in H1 2018, up 14 %  compared with the same period last year. Loans and advances to customers were up 7%, while customer deposits grew 25% in H1 2018 compared to the same period last year. We continue to closely monitor the the challenging macroeconomic conditions in Turkey but have the right strategy and management team in place to manage in the current economic environment and the improved results are evidence of this capability.    

“For our Associates, NBO reported a net profit of QAR 240 million for the half year, slightly impacted by challenging market conditions.  As for UAB, discussions for the sale of Commercial Bank’s stake in the UAB have been terminated. We currently classify as an Asset Held for Sale but will focus on improving the performance of the entity. ”