The Commercial Bank, its subsidiaries and associates reported a net profit of QR 1.66bn for the full-year 2018, a significant increase of 175.5 percent compared to QR 603.7m recorded for the same period in 2017. The Group’s operating profit rose by 5.9 percent year-on-year to reach QR2.33bn.
Announcing the financial results, Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Qatar’s economy is developing as the state pushes forward with reforms designed to strengthen the country’s economic future. In 2018, Qatar’s private sector grew by almost 6 percent, a clear indication that the right initiatives have been put in place to promote sustainable economic growth. This positive momentum is set to continue in 2019, with the IMF forecasting 4 percent growth for the non-oil sector.
“In December 2018 S&P Global Ratings revised Qatar’s outlook to stable due to the country’s prudent macroeconomic policies, which is an affirmation of the confidence global investors place on the country’s economic prospects.
Commercial Bank’s position as a leading financial institution enables it to play a significant role in supporting Qatar’s economic transformation agenda by participating in projects that will strengthen and diversify the national economy, the Chairman said.
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “In 2018 Commercial Bank started to see the results of its 5-year strategic plan come to fruition. As the legacy loan book provision program comes to an end, the Bank focused on optimising its portfolio and driving efficiencies. Operating expenses were down 11.5 percent as important investments in digitization and automation created leaner and more effective internal processes. The Bank continued to show significant improved bottom line performance. Consequently, the Board of Directors has recommended a cash dividend pay-out of 15 percent of par value or QR1.5 per share (pay-out ratio of 37 percent) subject to approval at the Annual General Assembly on 20 March 2019.”
The net interest income for the Group reduced is by 1.4 percent to QR2.48bn for the year ended 31 December 2018 compared to QR2.51bn from a year ago. Net interest margin remained at 2.2 percent as margins have been managed through active loan book re-pricing and diversifying liquidity sources to minimize the increasing cost of funding, the Vice Chairman added.
Non-interest income for the Group increased by 1.5 percent to QR1.02bn compared with QR1.01bn. The overall increase in non-interest income was mainly due to increase in fee-based income mainly on credit and transaction banking and foreign exchange gains.
Total operating expenses were tightly managed at a Group level, down by 11.5 percent to QR1.17bn for the year compared with QR1.32bn in 2017. Costs reductions were primarily driven by lower staff and administrative expenses.
The Group’s net provisions for loans and advances decreased by 45.4 percent to QR 927m for the year ended 31 December 2018, from QR1.69bn in 2017. The non-performing loan (NPL) ratio decreased to 5.6 percent compared to 5.7 percent in 2017. The loan coverage ratio has reduced to 78.9 percent from 81.0 percent. The Group balance sheet declined by 2.4 percent with total assets at QR 135.1bn, compared to QR138.4bn in 2017. The reduction was mainly due to lower loans and advances.
The Group’s loans and advances to customers reduced by 6.1 percent to QR 83.7bn compared with QR89.1bn. This was mainly due to the depreciation and the revaluation in government temporary overdraft.
The Group’s investment securities increased by 12.6 percent to QR 22.1bn. The increase is mainly in Government bonds. The Group’s customer deposits reduced by 8.1 percent to QR71.3bn, compared with QR 77.6bn in 2017, as the bank let go expensive deposits.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank posted a strong set of results in 2018. Our consolidated operating profit was QR2,335 million, an increase of 5.9 percent whilst net profit increased by 175.5 percent to QR1,663 million compared with 2017. Our team’s strong commitment and diligent execution of the Bank’s 5-year strategic plan is designed to cement Commercial Bank’s status as a leading financial institution in Qatar.
“The increase in net profit was driven by the reduction in loan provisioning compared to the previous year. Gross loan provisioning was down 45.4 percent as the legacy loan book provision program started to tail off. Operating profit was supported by a strong focus on efficiency, with the benefits of digitization also flowing through to the income statement. Consequently, our cost to income ratio is 33.4 percent for 2018 compared to 37.5 percent for last year.
“Consolidated net interest income was down by 1.4 percent to QR 2,482 million for the year 2018. The slight reduction was a result of the weakness in the Turkish Lira as reflected in Alternatifbank’s financial reports. Similarly, loans and advances were QR 83.7 billion in 2018, down 6.1 percent compared to last year due to the depreciation of the Turkish Lira and a contraction in Government borrowing following Qatar’s sovereign bond issuance in April 2018. Weakness in the Turkish Lira and efforts to dispose of high cost deposits resulted in customer deposits of QR71.3 billion.
“The Domestic Bank reported an increase of 4.0 percent in net interest income to QR 2,102 million, despite a 4.4 percent decrease in loans and advances compared to last year, through a combination of asset pricing and strong focus on cost of funding. Customer deposits decreased by 7.7 percent to QR 62.4 billion, which was the effect of a conscious decision to let go of expensive deposits bearing high interest rates. In Turkish Lira, Alternatifbank grew customer deposits by 26 percent and loans and advances by 23 percent, however in terms of Qatari Riyals, currency depreciation led to a 15 percent decline in loans and advances to customers and a 10 percent decline in customer deposits.
“Our Associate, NBO reported a net profit of OMR 50.6 million for the year, 15 percent higher than the previous year. We continue to classify UAB as an Asset Held for Sale and we remain focused on improving the performance of the entity as per our corporate strategy,” the GCEO said. In 2018 S&P revised Commercial Bank’s rating outlook from negative to stable which is a positive reflection of the execution of our 5-year strategic plan. The bank received several awards including ‘Best Retail Bank in Qatar’ for the second year in a row and ‘Best Remittance Service for the Middle East’ from The Asian Banker, together with ‘Best Bank in Qatar’ from Global Finance Magazine.
Source from: The Peninsula