The Commercial Bank (Q.S.C.) Announces Financial Results for the Half Year Ended 30 June 2016
20 July 2016
Half yearly profit QAR 482 million
Doha, Qatar: The Commercial Bank Q.S.C. (“Commercial Bank” or “the Bank”) and its subsidiaries and associates announced today its financial results for six months to 30 June 2016. The Bank delivered a net profit of QAR 208 million for the second quarter 2016 a decrease of 65% compared to the second quarter 2015, and a 24% decrease compared to the first quarter 2016. The Bank reported a net profit of QAR 482 million for the first half of 2016 as compared to QAR 1,052 million for the same period in 2015.
Key financial highlights compared to the same period in 2015
• Total assets up 7% to QAR 127 billion
• Customer loans and advances up by 6.6% to QAR 77.4 billion
• Customers’ deposits up 12.4% to QAR 72 billion
• Net operating income at QAR 1,832 million
• Net profit of QAR 482 million
• Earnings per share of QAR 1.22
• Issuance of EMTN of USD 750 million
His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Although world economic conditions remain challenging, the Qatari economy continues to deliver robust growth. The growth of the non-hydrocarbon sector continues to offset any impact of lower hydrocarbon prices. Qatar’s non-hydrocarbon economy is increasingly being driven by the services sector, offering Commercial Bank significant future opportunity. As we look to the future, we have strengthened our executive team with the appointment of Mr. Joseph Abraham, a highly experienced developed markets and emerging markets banker, to the role of CEO. We were delighted to promote Abdulla Saleh Al Raisi as Advisor to Commercial Bank’s Board. Both appointments will benefit the long term future of Commercial Bank.”
Financial Performance
Mr. Hussain Al Fardan, Commercial Bank’s Vice Chairman and Managing Director, added, “Commercial Bank reported an operating profit of QAR 1 billion for the first six months of 2016. Market conditions are challenging, however, the continued diversification of the Qatari economy and the Government’s commitment to its public infrastructure projects provides the opportunity for growth.”
Net operating income decreased by 11.7% to QAR 1,832 million for the half-year ended 30 June 2016, down from QAR 2,075 million achieved in the same period in 2015.
Net interest income was QAR 1,238 million for the half-year ended 30 June 2016, down 1.2% compared to that of the same period in 2015. Although asset yields in Qatar have improved, these have seen offset by reduction in ABank resulting in a relatively flat NII. NIMs have remained steady at 2.34% as compared to the first quarter of 2016.
Non-interest income was down 27.7% to QAR 595 million for the half-year ended 30 June 2016 compared with QAR 822 million. The decrease in non-interest income was due to lower net fee and commission income from ABank due to lower new loan generation.
Total operating expenses were up by 1% at QAR 831 million for the half-year ended 30 June 2016 compared with QAR 823 million for the same period in 2015.
The Bank’s net provisions for loans and advances were QAR 603 million for the half-year ended 30 June 2016 up 60% from QAR 376 million for the same period in 2015. The NPL ratio has increased to 4.8% at 30 June 2016 compared with 4.5% at the end of March 2016 and the coverage ratio increased to 78.5% as at 30 June 2016 compared to 76.1% at the end of March 2016.
Impairment provisions on the Bank’s investment portfolio increased to QAR 50 million for the half-year ended 30 June 2016 compared with QAR 12 million for the same period in 2015 mainly due to provisions required on equities.
Commercial Bank delivered balance sheet growth of 7% at the end of June 2016 with total assets at QAR 127.3 billion, compared to QAR 119.1 billion at the end of June 2015. Balance sheet growth was driven mainly by an increase of QAR 8 billion in customer deposits and loans and advances of QAR 5 billion.
Loans and advances to customers were up by 6.6% to QAR 77.4 billion at 30 June 2016 compared with QAR 72.6 billion at the end of June 2015. The growth in lending has been generated, mainly, in the Services, Commercial and Industry Sectors.
Investment securities is up by 3.5% to QAR 15.4 billion as at 30 June 2016 compared with QAR 14.8 billion at the end of June 2015. The increase is mainly in Qatar Government Bonds.
Customers’ deposits increased by 12.4% to QAR 72 billion at 30 June 2016, compared with QAR 64.1 billion as at 30 June 2015. The increase was mainly in time and demand deposits.
Mr. Joseph Abraham, Commercial Bank’s Chief Executive Officer, commented, “Commercial Bank’s financial performance for the period has been impacted by a combination of factors across the various markets in which it operates.” He added, “Qatar generated a solid performance despite the challenges of the slower market conditions due to lower hydro carbon prices. We continue our efforts to increase our yields by selective re-pricing of assets and focus on increased cross sell across our business lines. We are also looking at our business strategy to reshape our book to be in line with market opportunities. Our Turkish subsidiary ABank and associate UAB continue to operate in challenging economic conditions and their results reflect these conditions - our efforts will be focused on bringing greater integration of risk and business plans in these markets to ensure that they are reflective of market opportunities and risks. NBO in Oman has performed well given the market context. We have maintained a tight control on costs during the period and this will be our continuing focus to ensure we create space for necessary productive investments.”
“2016 will be a challenging year for the financial services sector; however, we will be focused on taking actions to ensure that Commercial Bank is in a good position to generate future value for customers and shareholders.”
Subsidiary in Turkey
Alternatifbank (“ABank”) delivered a net loss of TL 57.8 million for the half-year ended 30 June 2016 (TL 75 million profit for 2015).
Net operating income decreased by TL 102 million to TL 200 million for the half year ended 30 June 2016, from TL 302 million in 2015, mainly due to a decrease in net interest income. As at 30 June 2016, ABank had grown its customer lending by 6% to TL 10 billion and customers’ deposits increased by 18% to TL 7.2 billion compared with 30 June 2015.
Associates in the UAE and Oman
National Bank of Oman and United Arab Bank have achieved a profit of QAR 113 million for the half year ended 30 June 2016 as compared to QAR 217 million in the same period in 2015.
National Bank of Oman
National Bank of Oman (“NBO”) achieved a net profit of OMR 29 million for the half year ended 30 June 2016 as compared to OMR 28 million in the same period, an increase of 5% over 2015. Net operating income grew by OMR 3.4 million to OMR 67.8 million, from OMR 64.3 million in same period 2015, mainly due to an increase in net interest income which was up 10% to OMR 48.2 million. As at 30 June 2016, NBO grew its customer lending by 14% to OMR 2.8 billion and customers’ deposits reduced marginally to OMR 2.4 billion compared to 2015.
United Arab Bank
United Arab Bank (“UAB”) delivered a net profit of AED 70.8 million for the half-year ended 30 June 2016 which represents a decrease of 79% over the same period in 2015. The operating income for the half-year ended 30 June 2016 decreased by 31.6% to AED 476 million, from AED 696 million in 2015 Net Interest Income was down by 34%, Non-Interest Income was down by 22.6%, as compared to the same period in 2015. UAB’s loans and advances decreased by 4.9% to AED 14.8 billion as at 30 June 2016, with customers’ deposits at AED 15.2 billion, down 9% compared to 30 June 2015.