Chairman of the Board of Directors of Commercial Bank Sheikh Abdulla bin Ali bin Jabor Al Thani
Doha: The Commercial Bank (the Bank), its subsidiaries and associates (Group) yesterday reported a net profit of QR2.304bn for the year ended December 31, 2021, an increase of 77.1 percent compared to QR1.301bn for the same period in 2020.
The Board of Directors proposed a dividend distribution to shareholders of QR0.16 per share i.e. 16 percent of the nominal share value.
Operating profit for the Group increased by 15.3 percent to QR3,621.1m for the year ended December 31, 2021, compared with QR3,140.8m achieved in the same period in 2020.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “During 2021, Qatar’s economy improved on the back off the country’s robust vaccination programme, significant strengthening of energy prices particularly gas and the continued investment in infrastructure in the lead up to the 2022 World Cup. Furthermore, GDP is expected to increase by over 4 percent in 2022, which will be supported by all the previously mentioned factors and complemented by the projected spike in tourism with the upcoming FIFA World Cup.”
“During the past year, Commercial Bank has continued to focus on supporting the nation’s economy, through providing world-class banking solutions and innovative products, in line with the support programmes implemented by the Central Bank of Qatar. We believe that 2022 will offer significant opportunities in the market, that will present further growth for Commercial Bank.”
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “Our growth is testament to the continued investments in people, technology and infrastructure we have made in the business. As part of our commitment to support Qatar’s Vision 2030 and promote Qatar as a global hub for business, we continued to enhance our digital service offering, to ensure seamless banking for all our customers. In recognition of these efforts, Commercial Bank was awarded with several accolades over the course of the year recognizing our leading position in digital leadership, positioning us for further growth in 2022.”
Net interest income for the Group increased by 19.4 percent to QR3.701bn for the year ended December 31, 2021 compared with QR3.1bn achieved in the same period in 2020. Net interest margin increased to 2.7 percent for the year ended December 31, 2021 compared with 2.4 percent achieved in the same period in 2020. Although asset yields have reduced, the increase in margins is mainly due to proactive management of the cost of funding.
Normalized non-interest income for the Group decreased by 7.4 percent to QR1.069bn (23.1 percent on reported basis) for the year ended December 31, 2021 compared with QR1.155bn achieved in the same period in 2020. The overall decrease in non-interest income was mainly due to lower FX and trading income from Alternatif Bank driven by sharp increase in USD/TRY swap cost in 2021.
Normalized total operating expenses increased by 4.3 percent to QR1.15bn (35.0 percent on a reported basis) for the year ended 31 December 2021 compared with QR1.103bn in the same period in 2020.
The Group’s net provisions for loans and advances increased by 31.4 percent to QR1.099bn for the year ended December 31, 2021, from QR836.4m in the same period in 2020. The increase in provisions was mainly due continued prudent provisioning on NPL customers.
The non-performing loan (NPL) ratio increased to 4.7 percent at December 31, 2021 from 4.3 percent at December 31, 2020.
The loan coverage ratio decreased to 97.4 percent at December 31, 2021 compared with 101.6 percent at December 31,
2020.
The Group balance sheet has increased by 7.7 percent as at 31 December 2021 with total assets at QR165.5bn, compared with QR153.6bn in December 2020. The increase was mainly due to increase in balances with Central Bank and loans and advances.
The Group’s loans and advances to customers increased by 1.3 percent to QR98bn at 31 December 2021 compared with QR96.7bn in the same period in 2020. The increase was despite a reduction in the Government temporary borrowing in Q4 21 as it partly repaid its system wide temporary borrowing.
The increase was mainly in the commercial, services and government public sectors.
The Group’s investment securities increased by 3.7 percent to QR26.7bn at 31 December 2021 compared with QR25.8bn in the same period in 2020.
The Group’s customer deposits increased by 8.1 percent to QR82bn at 31 December 2021, compared with QR75.8bn in the same period in 2020. The increase is mainly in time deposits however, current and savings deposits have increased by 5.1 percent due to the various cash management initiatives and digital products that the bank offers.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank reported solid results for the year ended 31 December 2021. The Group reported a net profit of QR2.3bn for the period, up 77.1 percent compared to the same period last year primarily driven by improved net operating income in the domestic business and an improved contribution from associates.
“Net interest income grew 19.4 percent to QR3.7bn compared with QR3.1bn for the same period last year mainly due to higher average loans and a continued focus on low cost balances leading to an improvement in Net interest margin from 2.4 percent to 2.7 percent.”
“Total fees and other income decreased by 7.4 percent to QR1.1bn on a normalized basis (up by 23.1 percent on reported basis) compared to the same period last year mainly driven by lower FX and trading income from Alternatif Bank. However strong growth in loans and net interest income, in the domestic Qatar business resulted in operating income showed a healthy growth of 12.4 percent on a normalized basis.
“Normalized operating expenses increased by 4.3 percent, however cost-to income ratio continued its improving trend to 24.1 percent for the year ended December 31, 2021 compared with 26.0 percent for the same period in 2020.
“Gross provisions were down by 4.4 percent mainly due to lower ECL charges for the year, however net provisions for the period increased by 12.0 percent mainly due to continued prudent provisioning on NPL customers and lower recoveries in 2021. NPL coverage ratio decreased to 97.4 percent compared with 101.6 percent for the comparative period.
“Group loans and advances were QR98bn at the end of 2021, up by 1.3 percent compared to the same period in 2020, and customer deposits increased to QR82bn, up by 8.1 percent. Low cost deposits increased by 5.1 percent, which has helped reduce the cost of funding and positively impacted our net interest margin which grew from 2.4 percent to 2.7 percent.
“Alternatif Bank’s performance for the year ended 31 December 2021 was impacted by the continued volatility in the Turkish market and the depreciation of the Turkish lira. The bank reported a net profit of QR23.7m during the period compared with QR57.5m for the same period in 2020.
“The contribution from our share of associates in 2021 improved by 79.8 percent compared to 2020 driven mainly by reduced impairments and better performances at UAB and NBO.”
