DOHA: The Commercial Bank and its subsidiaries and associates achieved a net profit of QR 934m for the first half of 2019 (H1, 19) , up by 9.2 percent compared to the same period in the previous year. The Group’s operating profit for the period is up 6.8 percent to QR1.29bn. Total assets increased one percent to QR141.3bn.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Qatar is progressing well with its economic transformation, strengthening the country’s capital market by taking significant steps to attract inward investment and improve liquidity on its stock exchange through a ten-to-one stock split.
“I am proud that Commercial Bank as a leading financial institution in Qatar is able to play a key part in the development of the nation by offering a myriad of innovative banking and financial services to government entities, businesses and retail customers. We had the honour of becoming the first company to implement the stock split and look forward to supporting the continued growth and prosperity of the Qatari economy.”
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “We continue to see excellent results from the execution of our 5-year strategic plan. The bank has developed a strong franchise in Qatar and is renowned for its exceptional client experience and innovative services. We continue to extend our capabilities to better serve the needs of our clients and strengthen our position in the market.”
Net interest income for the Group reduced by 8.3 percent to QR1.21bn for the half year ended 30 June 2019 compared to QR1.32bn achieved in the same period in 2018. Net interest margin reduced to 2.1 percent for H1 19 compared to 2.3 percent achieved in H1 2018. The reduction in margins is mainly due to the increase in cost of funding in Turkey, although margins have been managed through active loan book re-pricing and diversifying liquidity sources to minimize the increasing cost of funding. However, NIM has improved quarter on quarter from 2.0 percent in Q1 2019 to 2.2 percent in Q2 2019.
Non-interest income for the Group increased by 24.7 percent to QR629m for the Half year ended 30 June 2019 compared with QR504m in the same period 2018. The overall increase in non-interest income was mainly due to increase in foreign exchange earnings.
Total operating expenses were tightly managed at a Group level, down by 11.1 percent to QR552m for the half year, compared with QR621m from a year ago.
Costs reductions were primarily driven by lower staff and administrative expenses.
The Group’s net provisions decreased by 1.7 percent to QR428m. The non-performing loan (NPL) ratio has reduced to 4.9 percent in H1, 19 compared to 5.6 percent in December 2018. The loan coverage ratio has increased to 97 percent in H1, 19 compared to 78.8 percent in December 2018.
The Group’s loans and advances to customers increased by 1.3 percent to QR84.8bn. The increase was mainly in the government and services sectors.
The Group’s investment securities increased by 7.6 percent to QR23.3bn. The increase is mainly in Government bonds. The Group’s customer deposits increased by 7.8 percent to QR76.9bn, and has resulted in the loan deposit ratio reducing from 117.4 percent to 110.3 percent.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “I am pleased to announce a strong set of financial results for the first half of 2019. Consolidated operating profit was QR1.29bn for the first half of 2019, an increase of 7 percent compared to the same period last year and consolidated net profit was QR934m in H1 2019 an increase of 9 percent compared to the same period in 2018. The strong execution of our five-year strategic plan continues to yield positive results along with the continued focus on productivity enhancements through digitization of operational processes.
“The increase in consolidated operating profit was driven by careful management of operating expenses and positive contributions from fees and other income. Operating expenses decreased 11 percent to QR552m during the first half of 2019 compared with the same period last year, a result of careful cost control and savings from our insourcing programme.
“Fees and other income were up 25 percent during H1 2019, compared with the same period last year, to QR629m. The increase was driven by gains in foreign exchange trading income and investment income. Consolidated net profit was also supported by a reduction in net loan provisioning which declined 2 percent during H1 2019, supported by an improved asset quality and increased recovery of NPLs”, the Group CEO said.
Consolidated net interest income was down by 8 percent to QR1.21bn during the first half of the year, due to weakness in the Turkish Lira and higher cost of funding in the Qatari market during the first quarter of 2019. However, when comparing the second quarter of 2019 with first quarter of 2019, there was an improvement of 9.7 percent as a result of systematic efforts to improve net interest margins during the quarter. This was achieved through a reduction in the cost of funding through careful management of our cost of deposits and repricing of our loan book.
Loans and advances were QR84.8bn in the first half of 2019, down 2 percent compared to the same period last year, largely due to the depreciation of the Turkish Lira. Customer deposits increased moderately to QR76.9bn, up 3 percent in H1 2019, compared to the same period last year.
The Domestic Bank reported net profit of QR870m, an increase of 11 percent compared to the same period last year. The improvement was largely driven by a reduction in net provisioning which decreased 15 percent compared to the same period last year. Operating profit increased to QR1.16bn during the period, driven by cost optimisation and an increase in total fees and other income which partially offset the decline in net interest income. Loan and advances to customers were stable at QR 73.7bn. Customer deposits increased 5 percent to QR67.5bn.
The Lira’s depreciation by circa 26 percent compared to the same period last year has impacted Alternatif Bank’s comparatives when translated in terms of Qatari Riyal. Alternatif Bank reported an increase in net profit to TL 99m, up 25 percent compared to the same period last year. In Turkish Lira, Alternatif Bank grew customer deposits by 15 percent and loans and advances by 8 percent, however in terms of Qatari Riyals, currency depreciation led to a 15 percent decline in loans and advances to customers and a 9 percent decline in customer deposits.
Source from: The Peninsula