The Commercial Bank, its subsidiaries and associates (Group) reported a net profit of QR179.6m for the half year ended 30 June 2017, a 62.8 percent decrease as compared to QR482m recorded for the same period in 2016.
Net interest income for the Group decreased marginally by 0.8 percent to QR1.22bn for the half year ended 30 June 2017 compared to QR1.23bn achieved in the same period in 2016, due to tight control on the cost of funding. Net interest margin remains stable at 2.2 percent compared to Q1 2017.
Commenting on the results, Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Commercial Bank has had a solid first half of the year. The banking system in Qatar is stable, with the Central Bank governor recently announcing that liquidity levels in the country are good and meet all customer requirements. Qatar’s reserves and investment funds are more than 250 percent of gross domestic product.
Qatar remains the world’s biggest exporter of gas to liquids products, a clear competitive advantage and a key driver of economic growth.” Hussain Al Fardan, Commercial Bank’s Vice Chairman, said: “Commercial Bank delivered an operating profit before provisions of QR1.1bn in the first half of 2017, an increase of 7.8 percent over the same period last year.
Growth was primarily driven by an increase in the overall balance sheet and loan growth, tight and well managed costs as well as an improved performance by ABank in Turkey.” Net operating income for the Group decreased by 3.1 percent to QR1.76bn for the half year ended 30 June 2017, down from QR1.82bn achieved in the same period in 2016.
Non-interest income for the Group decreased by 8.1percent to QR539.1 million for the half year ended 30 June 2017 compared with QR586.6 million for the same period last year. The overall decrease in non-interest income was due to lower income from investment securities.
Total operating expenses were tightly managed at a Group level, down 16.4 percent to QR687.5m for the half year ended 30 June 2017 compared with QR 822.9m for the same period in 2016. Costs reductions were primarily driven by lower staff and administrative expenses.
The Group’s net provisions for loans and advances increased by 59.5 percent to QR 961.5 million for the half year ended 30 June 2017, from QR602.9 million for the same period in 2016. The non-performing loan (NPL) ratio increased to 5.6 percent during the first half of the year as compared to 4.8 percent for the same period in 2016.
However, loan coverage ratio increased to 84.3 percent in the first half of the year compared to 78.5 percent for the same period in 2016.
The Group delivered balance sheet growth of 4.8 percent for the half year ended 30 June 2017 with total assets at QR133.4bn, compared to QR127.3bn for the same period in 2016.
Total asset growth was driven mainly by an increase of QR6.2bn in loans and advances and QR3.4bn in investment securities. Group’s loans and advances to customers increased by 8 percent to QR83.6bn for the half year ended 30 June 2017 compared with QR77.4bn for the same period in 2016. The growth in lending has been generated, mainly from the services sector. The investment securities increased by 22.4 percent to QR18.8bn for the half year ended 30 June 2017 compared with QR15.4bn for the same period last year. The increase is mainly in Government bonds.
Group’s customer deposits increased by 3.2 percent to QR74.4bn for the half year ended 30 June 2017, compared with QR72.1bn for the same period last year.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “The first half of the year has demonstrated we are on the right track with the implementation of our Strategic Reshape plan, positioning the Bank for future growth.
At a Group level, interest income increased 6 percent to QR2.4bn, while operating profit before provisioning increased 7.8 percent to QR1.1bn, as compared to the same period last year. Net profit for the six months to 30 June 2017 was QR179.6 million, a result which was affected by our prudent provisioning against Commercial Bank’s loan portfolio. “Investment and securities increased 22.4 percent to QR18.8bn, driven mainly by increased investments in government bonds. Customer deposits increased 3.2 percent to QR74.4bn”, the Group CEO said.
