Doha: The Commercial Bank, Qatar’s first private bank, and its subsidiaries and associates (Group) reported a net profit of QR2.02bn for the year ended December 2019, a huge jump by 20.7 percent as compared to QR1.67bn for the same period in 2018.
The Board of Directors proposed a dividend distribution to shareholders of QR0.2 per share or 20 percent of the nominal share value.The financials and proposed dividend distribution are subject to Qatar Central Bank approval and endorsement by shareholders at the Bank’s Annual General Meeting.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “We are privileged to call Qatar our home with its strong governance framework and progressive institutions. The country continues to benefit from accelerating economic growth supported by government policies, in particular the prudent actions taken by the Ministry of Finance and the Qatar Central Bank. The World Bank projected Qatar’s GDP growth to reach to 3.2 percent in 2020.
“Commercial Bank, a leading financial institution in the country, sees great potential to support the government with its economic diversification agenda while also supporting local private enterprises with their banking needs. The Bank continues to invest in technology and people to deliver world class financing solutions in Qatar,” Sheikh Abdulla added.
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “I am pleased to announce that 2019 has been a record-breaking year for Commercial Bank. We reported consolidated net profit of QR2.02 billion for the year, supported by the careful implementation of the Bank’s five-year strategic plan.
“During the year we reshaped our loan book and effectively managed the cost of our deposits supporting a 19.4 percent growth in net interest income. Our cost base was optimised by digitising our internal processes while we continued to leverage technology to drive the expansion of our transaction and cash management business.
“Commercial Bank has built a strong franchise in Qatar with a reputation for innovation and excellent customer service, and we will continue to build on these attributes as we move into 2020.”
The Group’s operating profit for the year 2019 increased by 33.6 percent to QR3.11bn, compared to QR2.33bn achieved in the same period in 2018. Net interest income for the Group increased by 19.4 percent to QR2.96bn. Net interest margin (NIM) increased to 2.5 percent from the previous year’s 2.1 percent. The increase in margins is mainly due to lower cost of funds as we dynamically managed our liability book in a falling interest rate environment through a change in liability book mix. Within the asset book, the investment book yields improved.
Non-interest income for the Group increased by 34.8 percent to QR1.38bn. The overall increase in non-interest income was due to increase in net fee and commission income mainly from cards and transactional banking, foreign exchange earnings and income from investment securities.
Total operating expenses slightly increased at a Group level, up by 4.7 percent to QR 1.22bn for the year . The increase was primarily driven by staff expenses on account of the IFRS 2 accounting of its performance rights (share options) granted to staff.
The Group’s net provisions decreased by 21.8 percent to QR653.7m, from QR835.5m in 2018. The non-performing loan (NPL) ratio has reduced to 4.9 percent, compared to 5.6 percent in the same period 2018. The loan coverage ratio has increased to 82.1 percent in 2019 compared to 78.6 percent in 2018.
In addition, the Group impaired its associate United Arab Bank by QR413.9m in 2019, on conversion from asset held for sale to an associate as the book value of UAB was higher than the industry standard model used for its valuation.
The Group balance sheet has increased by 9.3 percent at 31 December 2019 with total assets at QR147.5bn, compared to QR134.9bn in 2018. The increase was mainly in loans and advances and investment securities.
The loans and advances to customers increased by 4.0 percent to QR88.0bn. The increase was mainly in the government and public sector.
The Group’s investment securities increased by 20.9 peercent to QR26.8bn, mainly driven by Government bonds. The customer deposits increased by 6.3 percent to QR 76.3bn. The increase is mainly in the current and call deposits.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “The excellent results for the year including the highest net profit achievement in the history of the Bank demonstrates the strong execution of Commercial Bank’s five-year strategic plan. Growth was recorded across the board with consolidated net profit increasing 20.7 percent to a record-breaking QR2.02 billion for the year ended 31 December 2019, compared to the same period last year. The Bank improved its NIMs and extended its Transaction Banking capabilities, while net interest income increased by 19.4 percent to QR 2.96 billion despite the low interest rate environment globally.”
“Operating income for the year reached QR4.3bn, up 23.9 percent compared to the same period last year. The growth was supported by the increase in net interest income as well as total fees and other income, as the Bank benefited from strong demand for its Transaction Banking and Cash Management products. Total fees and other income, which increased 34.8 percent to QR1.4bn for the year ended 31 December 2019 compared to the same period last year, included a 39 percent increase in FX and trading income to QR281 million. the Group CEO added.
Alternatif Bank reported a good set of results despite challenging market conditions and the depreciation of the Turkish lira by circa 21 percent. The bank reported an increase in net profit to QR100 million, up 10 percent compared to the previous year. Alternatif Bank grew customer deposits by 4 percent while loans and advances dropped by 3% at the end of the year, compared to the previous year.
“Our Associate, NBO, performed steadily during 2019, reporting a net profit of QR 485m. UAB has been reclassified from an asset held for sale to an associate, and we have taken a goodwill charge of QR413.9m. A new CEO for UAB was appointed in March 2019 and we will be working to ensure that UAB achieves improved results through implementation of a new strategic plan”, the Group CEO said.
