Posted on October 19, 2015

The Commercial Bank Q.S.C. (“Commercial Bank” or “the Bank”), its subsidiaries and associates announced today its financial results for the nine month period ended 30 September 2015. The Bank reported a net profit of QAR 1,341 million as compared to QAR 1,553 million for the same period in 2014, a decrease of 13.7%.

Key financial highlights compared to the same period in 2014

  • Net operating income up  4% to QAR  3,058 million
  • Net profit of QAR 1,341 million
  • Total assets up  4.3% to QAR 119.2 billion
  • Customer loans and advances up by 3.8% to QAR 73.4 billion
  • Customers’ deposits up  10.3% to QAR 64.1 billion
  • Earnings per share of QAR  3.98

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “The global economy continues to adjust to the challenges of a lower oil price, a continuation of low global interest rates, and a moderation in emerging markets’ economic growth.  Despite these challenges, Qatar’s economy continues to diversify, recording the highest non-oil GDP growth rate in the GCC region.  Commercial Bank’s strategy, guided by its Board of Directors, enables it to take advantage of Qatar’s growing private sector, utilising our 40 year heritage of servicing the financing needs of growing companies in Qatar and the region.”

Financial Performance

Commenting on financial performance, Mr. Hussain Alfardan, Commercial Bank’s Vice Chairman and Managing Director said, “Commercial Bank has continued to build on its strategy of creating sustainable value for our customers and shareholders.  The continued successful execution of our strategy means that Commercial Bank remains well positioned to generate value even as we expect the growth of our markets to moderate.  Commercial Bank delivered a solid performance for the nine month period of 2015, delivering a 4% increase in net operating income to QAR 3,058m.  Commercial Bank’s UAE associate partner United Arab Bank has experienced difficult market conditions resulting in prudent provisioning during the period, which has affected our net profit.”

Net operating income increased by 4% to QAR 3,058 million for the nine months ended 30 September 2015, up from QAR 2,934 million achieved in the same period in 2014.  

Net interest income was QAR 1,903 million for the nine months ended 30 September 2015, 2% lower than the same period of 2014, mainly due to a reduction in asset yields at AlternatifBank (“ABank”). Net interest margin decreased marginally to 2.5% as compared to 2.6% in the same period in 2014.

Non-interest income was up by  16% to QAR  1,155 million for the Nine Months ended 30 September 2015 compared with QAR 996 million. The overall increase in non-interest income was due to higher net fee and commission income, higher foreign exchange gains and profit on sale of property, which was partially offset by lower income from investments securities.

Total operating expenses were up by 3% at QAR 1,256 million for the nine months ended 30 September 2015 compared with QAR 1,220 million for the same period in 2014.  

The Bank’s net provisions for loans and advances were QAR 544 million for the nine months ended 30 September 2015, up  44% from QAR 377 million for the same period in 2014.  The non-performing loan (NPL) ratio has reduced to  3.6 % at 30 September 2015 compared with 3.7% at the end of September 2014 and the coverage ratio increased to 81.3% as at 30 September 2015 compared to 68.3% as at 30 September 2014.

Impairment provisions on the Bank’s investment portfolio reduced to QAR 25 million for the nine months ended 30 September 2015 compared with QAR 43 million for the same period in 2014.

Commercial Bank delivered balance sheet growth of 4% at the end of September 2015 with total assets at QAR 119.2 billion, compared to QAR 114.3 billion at the end of September 2014. Total asset growth was driven mainly by an increase of QAR 4.8  billion in investment securities and QAR 6  billion in customer deposits.

Loans and advances to customers were up by 3.8% to QAR 73.4 billion at 30 September 2015 compared with QAR 70.7 billion at the end of September 2014. The growth in lending has been generated, mainly in Services and Consumption Sectors.

Investment securities is up 35.1% to QAR 18.4 billion as at 30 September 2015 compared with QAR 13.6 billion at the end of September 2014.  The increase is mainly in Treasury bills issued by the Central Bank and government bonds.

Customers’ deposits increased by 10.3% to QAR 64.1 billion at 30  September 2015, compared with QAR 58.1 billion as at 30 September 2014.  The increase was mainly in time deposits.

Mr. Abdulla Saleh Al Raisi, Commercial Bank’s Chief Executive Officer, commented, “The dynamics of our markets mean that we are seeing a growing range of opportunities for Commercial Bank.  The private sector is becoming an increasingly important driver of Qatar’s economy, as well as those of our other markets, whilst the public sector continues to offer good opportunities. We have grown Commercial Bank by offering innovative and customer focused products and services despite the expected slowing of the economies in which we operate. Our net profit for the nine month period ended 30 September 2015 of QAR 1.3 billion was impacted by the increased provisioning levels at UAB. However, our results for this period represent a solid operating performance in increasingly challenging markets, with year on year growth on loans and advances by 3.8% to QAR 73.4 billion and customers’ deposits growth by 10.3% to QAR 64.1 billion.  The 4% increase in operating income was driven by the 16% increase in Fees and Other Income to QAR 1.1 billion.

Summarising the Bank’s business achievements and initiatives for the third quarter of 2015, Commercial Bank signed a new “Al Dhameen program” portfolio agreement with Qatar Development Bank.  The Bank launched a number of summer promotions, namely a Ramadan and summer Credit Card campaign; an international money transfer campaign for Online Banking and Mobile Banking; an ATM-use campaign; a Personal, Vehicle and Mortgage summer Loan campaign; a Debit Card money back campaign; and a campaign for “Life in Qatar”, Commercial Bank’s specialised services for newly arrived expatriates.

Technological innovations during this same period included the launch of an enhanced Internet Banking website featuring first-to-market technologies, and the introduction of a live link with the Credit Bureau Office enabling Commercial Bank to offer the fastest approval times for loans in Qatar. Commercial Bank was judged to be the best bank in Qatar for SMEs at The International Banker 2015 Middle East and Africa awards, complementing earlier awards success with Commercial Bank taking the accolade of “Best Retail Bank in Qatar 2015” from The Asian Banker earlier this year.

Subsidiary in Turkey

Alternatifbank (“ABank”) delivered an 18.4% increase in net profit to TL 116 million for the nine months ended 30 September 2015 (TL 98 million for 2014). Net operating income grew by TL 100 million to TL 472 million for the nine months ended 30 September 2015, from TL 372 million in 2014, mainly due to an increase in net fees and commission income and investment income.  As at 30 September 2015, ABank had grown its customer lending by 34.7% to TL 10.7 billion and customers’ deposits increased by 14.1% to TL 6.2 billion compared with 30 September 2014.

Associates in the UAE and Oman

National Bank of Oman

National Bank of Oman (“NBO”) achieved a net profit of OMR 43 million for the nine months ended 30 September 2015 as compared to OMR 37 million, an increase of 16% over 2014.  Net operating income grew by OMR 14 million to OMR 98 million, from OMR 84 million in same period 2014, mainly due to an increase in net interest income which was up 15% to OMR 70 million.  As at 30 September 2015, NBO  grew its customer lending by 12% to OMR 2.5 billion and customers’ deposits reduced marginally to OMR 2.4 billion compared to 2014.

United Arab Bank

United Arab Bank (“UAB”) delivered a net profit of AED 72 million for the nine months ended 30 September 2015 which is lower by 85% over the same period in 2014. The decrease in the profit is mainly due to UAB experiencing difficult market conditions which resulted in prudent provisioning during the period.  The net operating income for the nine months ended 30 September 2015 was down by 3% to AED 998 million, from AED 1,032 million in 2014 with a solid underlying performance in Net Interest Income which was up by 5%, while a decrease in Non-Interest Income by 25%, as compared to the same period in 2014.  UAB’s loans and advances  were down by 2% to AED 17.6 billion as at 30 September 2015, with customers’ deposits at AED 18.3 billion, down 2% compared to 30 September 2014.

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