DOHA: The Commercial Bank, its subsidiaries and associates delivered a combined net profit of QR604m for the full-year 2017, an increase of 20.4 percent, compared to QR501m reported for the same period in 2016. The Group’s total assets rose by 6.2 percent to QR138.4bn.
Total asset growth was driven mainly by an increase of QR11.3bn in loans and advances and QR4.2bn in investment securities.
Announcing the financial results, Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “2017 was a challenging year for Qatar and Commercial Bank where both the public and private sectors adapted to a new market environment due to the land, air and sea blockade imposed by Qatar’s neighbours. Both have proven to be resilient. Despite this, Qatar’s robust macro fundamentals have not materially changed, reflected by an AA- rating by Fitch and Aa3 by Moody’s. Commercial Bank has successfully concluded the first year of the 5-year strategic plan under which it has made good progress in cleaning up its balance sheet, diversifying its loan portfolio geographically and tenor to create a healthier risk profile, and driving efficiencies across the business.”
“Looking ahead, country fundamentals remain strong which will provide opportunities for Commercial Bank as well. Qatar’s large financial buffers of approximately $35 billion in net international reserves at the Qatar Central Bank and more than $300 billion of assets managed by the Qatar Investment Authority provide a strong liquidity position,” he said.
Spending is set to increase in education, health and construction projects in advance of the FIFA 2022 World Cup for which preparations are on track,” the chairman added.
Hussain Al Fardan, Commercial Bank’s Vice Chairman, added, “The impact of the economic blockade on our business has been minimal, with the actions taken under the strategic plan already showing results and positioning the Bank to show significant improved bottom line performance in the coming years.”
Consequently, the Board of Directors have recommended a cash dividend pay-out of 10 percent of par value or QR1.0 per share (pay-out ratio of 66 percent) subject to approval at the Annual General Assembly on 21 March 2018.
The Group’s net operating income for the Group decreased by 1.4 percent to QR3.52bn for the full year ended 31 December 2017,down from QR3.57bn achieved in the same period in 2016.
Net interest income for the Group increased by 7.6 percent to QR2.51bn for compared to QR2.34bn achieved a year ago, due to an increase in the interest income as a result of higher interest rates as compared to last year.
Net interest margin remains stable at 2.2 percent compared to Q3 2017.
Non-interest income for the Group decreased by 18.3 percent to QR1bn compared with QR1.23bn 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, down19.0 percent to QR1.32bn against QR1.63bn.
Costs reductions were primarily driven by lower staff and administrative expenses.
The Group’s net provisions for loans and advances increased by 33.8 percent to QR 1.69bn from QR1.26bn for the same period in 2016.The non-performing loan (NPL) ratio increased to 5.65 percent from 5.01 percent.
The loan coverage ratio increased to 81.0 percent in the full year ended 31 December 2017 compared to 78.9 percent for the same period in 2016. The Group’s loans and advances to customersincreased by 14.6 percent to QR89.1bn for the full year ended 31 December 2017 compared with QR77.8bn for the same period in 2016.
The growth in lending has been generated, mainly from the government, semi-government and services sectors.
The Group’s investment securities increased by 27.6 percent to QR19.6bn compared with QR15.4bn The increase is mainly in Government bonds.
The Group’s customer deposits increased by 9.5 percent to QR77.6bn, compared with QR70.9bn for the same period last year.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank reported results for the year ended December 2017 demonstrate the impact of strong execution of our strategic plan which called for building a strong diversified business whilst provisioning legacy loans and improving cost efficiency.”
Despite market conditions, Commercial bank continued to grow its business with the right sector mix underpinned by faster than market growth of 14.6 percent in loans and advances to customers and 9.5 percent in customer deposits.
Consolidated Net Interest Income increased 7.6 percent year on year to QR2.52bn.
“Consolidated Operating Profit increased 13.5 percent year on year to QR2.21bn, driven by overall balance sheet growth and stable margins which reflected the actions taken on the management of liquidity and funding costs.
I am also pleased to report a significant decrease in our operating expenses of 19.0 percent year on year, in line with our strategy to drive efficiencies across the business, streamline processes and reduce costs. Consequently, the Bank reported a healthy consolidated cost of income ratio of 37.5 percent, down from 45.7 percent at FY 2016.
“As part of our strategy, we strengthened our balance sheet and made additional provisions on legacy assets, increasing provisioning by 33.8 percent year on year to QR1.70bn. Consolidated net profit was QR604m at FY 2017.
“Domestic Bank reported an increase of 4.7 percent in net interest income, while advances to customers grew by 14.5 percent and customer deposits were up 7.7 percent for the year ended 31st December 2017.
