Doha, Qatar: The Commercial Bank (P.S.Q.C.) (“the Bank”), its subsidiaries and associates (“Group”) announced today its financial results for the nine months ended 30 September 2018. The Group reported a net profit of QAR 1,259.6 million as compared to QAR 259 million for the same period in 2017, an increase of 386%.
Key financial highlights for the Group compared to the same period in 2017
- Total assets of QAR 138.7 billion, up by 3.5%
- Customer loans and advances of QAR 84.8 billion, up by 0.3%
- Customer deposits of QAR 74.9 billion, up by 2.2%
- Operating profit of QAR 1.8 billion, up by 7.9%
- Cost income ratio of 33.5% reduced from 38.1%
- Provisions on loans and advances to customers QAR 616.8 million, down by 57.5%
- Net profit of QAR 1,259.6 million, up by 386%
His Excellency Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Qatar continues to transform its economy for a more sustainable future, implementing a raft of reforms designed to strengthen the economy, increase self-sufficiency and promote growth.
“Markets have reacted positively to Qatar’s economic developments and the vision of its leadership with the QE Index posting its biggest quarterly jump1 in four years, outperforming its regional peers and becoming the second-best performer in the world in dollar terms this year.
“By aligning itself with the economic objectives of the nation and providing a strong, stable and innovative financial institution to support Qatar’s economy, Commercial Bank is pleased to continue to be a part of Qatar’s growth story.”
Financial Performance
Mr. Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “Our bottom line continues to show improvement as our legacy loan provisioning reduces. We have also made progress in optimising costs with strategic investments in key technologies to digitize and automate internal systems, partly reflected in the 12% reduction in operating expenses during the first nine months of 2018 as compared to the same period last year.”
Net operating income for the Group increased by 0.4% to QAR 2,663 million for the nine months ended 30 September 2018, up from QAR 2,654 million achieved in the same period in 2017.
Net interest income for the Group increased by 4.0% to QAR 1,908 million for the nine months ended 30 September 2018 compared to QAR 1,836 million achieved in the same period in 2017, driven mainly by re-pricing of some of the loans during the period. Net interest margin is 2.3% for the nine months, an increase of 0.1% compared to the same period in 2017.
Non-interest income for the Group decreased by 7.8% to QAR 755 million for the nine months ended 30 September 2018 compared with QAR 819 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 12% to QAR 892 million for the nine months ended 30 September 2018 compared with QAR 1,012 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 57.5% to QAR 617 million for the nine months ended 30 September 2018, from QAR 1,451 million for the same period in 2017. The non-performing loan (NPL) ratio decreased to 5.5% in the nine months ended 30 September 2018 compared to 5.6% for the same period in 2017. The loan coverage ratio
is maintained at 83.5% in the nine months ended 30 September 2018 compared to 91.6% for the same period in 2017.
The Group delivered balance sheet growth of 3.5% for the nine months ended 30 September 2018 with total assets at QAR 138.7 billion, compared to QAR 134.0 billion for the same period in 2017. Total asset growth was driven mainly by an increase of QAR 2.2 billion in investment securities and QAR 1.9 billion due from banks.
The Group’s loans and advances to customers increased by 0.3 % to QAR 84.8 billion for the nine months ended 30 September 2018 compared with QAR 84.5 billion for the same period in 2017.
The Group’s investment securities increased by 11.5% to QAR 21.5 billion for the nine months ended 30 September 2018 compared with QAR 19.4 billion for the same period last year. The increase is mainly in Government bonds.
The Group’s customer deposits increased by 2.2% to QAR 74.9 billion for the nine months ended 30 September 2018, compared with QAR 73.3 billion for the same period last year.
Mr. Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank’s performance during the first nine months of the year, is a testament to the team’s execution of our 5-year strategic plan. Our consolidated operating profit was QAR 1.77 billion, an increase of 8% whilst net profit increased 386% to QAR 1.26 billion compared to the same period last year.
“Our bottom line has benefited from the reduction of our legacy loan book provisioning and is trending towards a normalised provisioning rate. This was supported by a focus on efficiency across the business with operating expenses declining. As a result our cost to income ratio is now 33.5% compared to 38.1% for the same period last year.
“Consolidated net interest income increased to QAR 1.91 billion during the first nine months of 2018, up by 4% compared with QAR 1.84 billion during the same period last year. Loans
and advances remained stable at QAR 84.8 billion at the end of Q3 2018, due to the impact of the depreciation in the Turkish Lira and a contraction in Government loans due to repayment of loans post the State of Qatar bond issue. Customer deposits increased to QAR 74.9 billion in September 2018, up 2.2% compared to the same period last year.
“The Domestic Bank reported an increase of 7% in net interest income to QAR 1.67 billion, supported by 4% growth in loans and advances compared to the same period last year and customer deposits increased by 3% at QAR 66 billion.
“Our strategy with Alternatif Bank in Turkey has been to focus on proactively addressing the risk profile of customers in order to meet possible challenges in the current risk and macro-economic environment. Alternatif Bank reported an increase in net profit to QAR 75 million in the first nine months of 2018, up 29% compared with the same period last year. In Qatari Riyals, loans and advances to customers declined 18% in Q3 2018 compared to the same period last year, due to currency depreciation. In local currency terms, Alternatif Bank delivered a growth of 62% in net profit, while loans and advances to customers increased 47% to TL 19.1 billion for the period.
“Our Associate, NBO reported a net profit of QAR 360 million for the first nine months of 2018, 10% higher than that of the same period in 2017. We continue to classify UAB as an Asset Held for Sale and we remain focused on improving the performance of the entity as per our corporate strategy.”
-Ends-
Rahul Ravisankar
Consultant, Strategic Communications
FTI Consulting
+971 4 437 2103 T | +971 56 170 3833 M
rahul.ravisankar@fticonsulting.com
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Office 804 Level 8, South Tower, Emirates Financial Towers
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