Posted on April 17, 2018

The Commercial Bank (P.S.Q.C.) (“the Bank”), its subsidiaries and associates (“Group”) announced today its financial results for the quarter year ended 31 March 2018. The Group reported a net profit of QAR 405 million as compared to QAR 91 million for the same period in 2017, an increase of 345%.

Key financial highlights for the Group compared to the same period in 2017

  • Total assets of QAR 146.3 billion, up by 8.4%
  • Customer loans and advances of QAR 92.7 billion, up by 13.0%
  • Customer deposits of QAR 79.3 billion, up by 10.3%
  • Operating profit of QAR 608 million, up by 14.6%
  • Cost income ratio of 33.9% reduced from 40.1%
  • Provisions on non-performing loans at QAR 222 million, down by 53.7%
  • Net profit of QAR 405 million, up by 345%

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “The Qatari economy is resilient with GDP growth revised upwards  to 2.8% for 2018, making it one of the fastest growing economies in the region. Confidence in Qatar’s economy prevails, reflected by the strong appetite for Qatari bonds. The Bank had a strong start to 2018, with top line growth and operating profitability on the rise for the fifth sequential quarter, thanks in part to the bank’s strong franchise and balance sheet, as well as prudent management of liquidity. “Looking ahead to 2018 and beyond, the projected growth of the private sector will present several opportunities for the Bank to finance the expansion of business in the country.”

Financial Performance

Mr. Hussain Al Fardan, Commercial Bank’s Vice Chairman, added, “Commercial Bank had an excellent start to the year and continued with the execution of its 5-year strategic plan.  The bank reported its  fifth sequential quarter of increased operating profitability with strong asset growth, a stable funding platform and increased efficiencies across the operating business.”

Net operating income for the Group increased by 3.8% to QAR 919 million for the quarter ended 31 March 2018, up from QAR 885 million achieved in the same period in 2017. 

Net interest income for the Group increased by 10.1% to QAR 659 million for the quarter ended 31 March 2018 compared to QAR 599 million achieved in the same period in 2017, driven mainly by strong loan growth. Net interest margin is 2.3% for the quarter, an increase of 0.1% compared to Q1 2017, however stable compared to Q4 2017.

Non-interest income for the Group decreased by 9.4% to QAR 260 million for the quarter ended 31 March 2018 compared with QAR 287 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 foreign exchange income.

Total operating expenses were tightly managed at a Group level, down 12.4% to QAR 311 million for the quarter ended 31 March 2018 compared with QAR 355 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 53.7% to QAR 222 million for the quarter ended 31 March 2018, from QAR 479 million for the same period in 2017. The non-performing loan (NPL) ratio increased to 5.3% in the quarter ended 31 March 2018 compared to 5.0% for the same period in 2017. The loan coverage ratio increased to 86.4% in the quarter ended 31 March 2018 compared to 85.9% for the same period in 2017.

The Group delivered balance sheet growth of 8.4% for the quarter year ended 31 March 2018 with total assets at QAR 146.3 billion, compared to QAR 135.1 billion for the same period in 2017. Total asset growth was driven mainly by an increase of QAR 10.7 billion in loans and advances and QAR 3.0 billion in investment securities, which was partially offset by a decrease of QAR 6.5 billion in Due from banks & financial institutions.

The Group’s loans and advances to customers increased by 13.0% to QAR 92.7 billion for the quarter ended 31 March 2018 compared with QAR 82.0 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 17.7% to QAR 20.2 billion for the quarter ended 31 March 2018 compared with QAR 17.2 billion for the same period last year. The increase is mainly in Government bonds.

The Group’s customer deposits increased by 10.3% to QAR 79.3 billion for the quarter ended 31 March 2018, compared with QAR 71.9 billion for the same period last year.

Mr. Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “I am pleased to report a strong business performance for the first quarter of the year, a clear indicator that we have the right strategy in place and the right team to implement it.

“The results of the strong execution of our 5 year strategic plan are seen in Q1 2018 results with a consolidated operating profit of QAR 608 million and a net profit of QAR 405 million, representing a 15% and a 345% increase over the same period last year, respectively. As we advised last year we have come to the end of the legacy loan book provisioning and the normalised credit charge has benefited our bottom line. More importantly we have continued to grow our business strongly with a focus on the government and public sector, introduced new and innovative products in retail banking as part of our digital agenda and continued our tight focus on efficiency driving down our cost income ratio whilst continuing to invest in our product and infrastructure. Our efforts were recognised by Asian Banker winning the “Best Retail Bank in Qatar 2018”, “SME Bank of the year in the Middle East 2017” and “Best Cash Management bank in Qatar 2017”.

“Consolidated net interest income increased to QAR 659 million, up 10% compared with the same period last year. Loans and advances were up 13% to QAR 92.7 billion driven by growth in public sector and government related enterprises and in the services and industries sectors. Customer deposits were up 10% to QAR 79.3 billion. Growth was driven by the Domestic Bank, supported by its strong market position and brand recognition in Qatar. “The Domestic Bank reported an increase of 3% in Net Interest Income to QAR 545 million, supported by 11% growth in loans and advances and 8% growth in customer deposits, compared to the same period last year.

“This quarter also saw the successful rebranding of ABank to Alternatifbank, as part of a broader strategy to more closely align associates and subsidiaries with the group. The new management team in Alternatifbank also had positive impact with operating profit increasing to QAR 85 million in Q1 2018, up 38% compared with the same period last year. Loans and advances to customers were up 24% while customer deposits grew 28% in Q1 2018 (QAR) compared to the same period last year. Appetite in the Turkish market is strong and we are in a good position to grow our business in this market. 

“For our Associates, NBO reported a net profit of QAR 119 million for the quarter, slightly impacted by challenging market conditions.  For UAB, discussions are ongoing to negotiate terms of the potential sale of Commercial Bank’s stake in the bank.

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