Commercial Bank of Qatar has registered a first half net profit of QR1.024bn, up 1% against the same period in 2012. Net profit for the second quarter of 2013 was up 2.5% to QR518mn compared with the first quarter of 2013.
HE Abdullah bin Khalifa al-Attiyah, chairman, said: "Commercial Bank, through both its retail and wholesale businesses, is positioned to capture the opportunities offered by Qatar's rapidly changing economy as it transitions away from its traditional hydrocarbon-based growth.
"The bank's acquisition of Alternatifbank in Turkey underpins our strategy of diversifying our revenue streams and will facilitate growth for all of the banks in the Commercial Bank Alliance. We look forward to Alternatifbank making a positive contribution to Commercial Bank's growth strategy."
Hussein Alfardan, the managing director, said: "Commercial Bank delivered a solid set of results in the second quarter of the year continuing the growth seen in its underlying business during the first quarter.
"Despite the continued competitiveness of Qatar's banking sector, the Bank improved its profitability in the second quarter by 2.5% compared with the first quarter of the year, and has grown lending and deposits by 7% and 13%, respectively, since the end of last year."
Net operating income increased by 14% to QR1.6bn in the first half of 2013, up from QR1.4bn achieved in the same period in 2012.
Net interest income was QR914mn for the half-year ended 30 June 2013, 3% lower than in the same period in 2012, reflecting growth in lending to customers offset by the impact of a reduction in the net interest margin which declined to 2.54% in the second quarter of 2013 compared with 2.64% for the first quarter.
Although the average cost of funds for both deposits and other borrowed funds reduced in the period, a further decline in average lending yields due to market pricing pressure led to the lower net interest margin.
Non-interest income was up 47% to QR684mn in the first half of 2013 compared with QR464mn for the same period in 2012.
The higher level of non-interest income reflected improved net fee and commission income up by 17% mainly due to higher levels of loan-related and trade service fee income, an increase of 8% in foreign exchange income and the realisation of gains from the Bank's investment portfolio which were up by QR122mn compared with the first half of 2012.
The Bank's total operating expenses were up by 11% to QR503mn in 2013 compared with QR455mn in the six months ended 30 June 2012. Staff costs were 7% higher than the first half of 2012, and up by 3% in the second quarter compared with the first quarter of 2013.
General and Administrative expenses, and Depreciation, were also up reflecting investment made in the Bank's infrastructure.
The Bank's net provisions for loans and advances were QR194mn for the six months ended 30 June 2013, up from QR32mn provided in the same period for 2012.
Net provisions and non-performing loans have been impacted in the second quarter of 2013 by a prudential provision taken on a domestic real estate loan; the first half of 2012 included the recovery of provisions of QR89mn.
The non-performing loan ratio has increased to 3.49% at 30 June 2013 compared with 1.39% at the end of March 2013 due, mainly, to the newly provisioned domestic loan.
Provisions for impairment on the Bank's investment portfolio were QR21mn for the half-year ended 30 June 2013 compared with QR27mn in 2012.
The Bank's total assets increased by 16% to QR85.4bn at 30 June 2013 compared with QR73.6bn at the end of June 2012, and up by 7% since the end of December 2012. The increase in total assets from the end of 2012 was due to growth of QR3.4bn in lending to customers and QR1.2bn in balances due from banks and financial institutions.
Loans and advances to customers were up by 18% to QR52.0bn at 30 June 2013 compared with QR44.2bn at the end of June 2012, and up by 7% from QR48.6bn at 31 December 2012. The growth in lending since 30 June 2012 has been generated, mainly, in the Services, Commercial, Contracting and Real Estate Sectors across both the Wholesale and Retail businesses. Due from banks and financial institutions increased due to higher placements with, and lending to, banks.
Customers' deposits were at QR46.9bn as of 30 June 2013, an increase of 16% compared with the end of June 2012 and up 13% since 31 December 2012, as the Bank continues to manage its balance sheet to optimise its funding mix and reduce cost of funds.
The Bank's capital position remains strong with the capital adequacy ratio at 15.7% as of 30 June 2013 compared with 17.0% at the end of 2012, well above the Qatar Central Bank's required minimum level of 10%.
On 18 July 2013, the Bank announced the completion of its acquisition of a 70.84% shareholding in Alternatifbank (ABank) in Turkey from Anadolu Endustri Holding. The completion follows approvals from the regulators in Qatar and Turkey. Commercial Bank announced its intention to acquire a majority stake in ABank in March 2013. As part of the transaction, Commercial Bank will launch a mandatory tender offer to acquire the 4.16% of ABank's shares that remain in the public domain.
The transaction is based on two times the book value of ABank at 30 June 2013 and expands Commercial Bank's international footprint to four regional markets: Qatar, UAE, Oman and Turkey. Anadolu will retain a 25% stake in ABank in addition to board representation.
Andrew Stevens, Group CEO, said: "The second quarter of the year has seen Commercial Bank continue to deliver against its strategy. The Qatari market remains highly competitive yet our strong and diversified funding base has enabled us to target new lending and income streams.
"Our affiliate banks, United Arab Bank and the National Bank of Oman, delivered good growth with a combined profit of QR146mn, up 18%, compared with the first half of 2012.
"The acquisition of ABank in Turkey will increase the scale of Commercial Bank's international operations and diversify its revenue streams generating long-term growth."
Commercial Bank's associates increased their contribution to the Bank's net profit by 18% to QR146mn in the first half of 2013 compared with QR124mn for the same period in 2012.
National Bank of Oman (NBO) delivered a net profit after tax for the six months ended 30 June 2013 of 18.8mn Omani rials compared with OR 19.9mn achieved in 2012.
Operating income at OR 50.6mn was in line with the previous year and reflected higher net interest income, up 9%, to OR36.2mn due to growth in lending combined with a reduction in the cost of funds, offset by lower referral fee income following the regulatory changes to personal loans introduced by the Central Bank of Oman in May 2012.
Operating expenses increased by OR 1.0mn to OR 23.4mn for the first six months of 2013 due, mainly, to higher staff costs. The net impairment losses for 2013 were OR5.9mn, up from 5.2mn in 2012, with the increase related to new general provisioning requirements on loans to banks.
Loans and advances to customers grew by 11.5% to OR2.08bn as on June 30, 2013, while customers' deposits were up by 14.2% to OR2.09bn as compared to end-June, 2012.
United Arab Bank delivered a net profit of 260mn UAE dirhams for the first six months of the year, an increase of 35% from Dh193mn achieved in the same period in 2012. The increase in net profit reflected higher total operating income, which was up by 37% to Dh478mn, partially offset by increased operating expenses.
The increase in total operating income was due to higher net interest income up 36% to Dh353mn and an increase of 40% in non-interest income to Dh125mn reflecting growth in both Corporate and Retail businesses.
The provision for impairment of loans and advances was Dh72mn for the six month period in 2013 compared with Dh50mn in 2012, and continues to reflect a prudent and proactive approach to general provisioning adopted by UAB with regard to its management of risk and growing asset portfolio.
Loans and advances to customers grew by 38% to Dh13.25bn as of June 30 , 2013, and customers' deposits were up 47% to Dh12.43bn as compared with June 30, 2012.
© Gulf Times 2013
