The Commercial Bank reports net profit of QAR 491 million
DOHA: The Commercial Bank QSC (Commercial Bank or The Bank), its subsidiaries and associates yesterday announced its financial results for the nine month period ended 30 September 2016. The Bank reported a net profit of QAR 491 million as compared to QAR 1,341 million for the same period in 2015, a decrease of 63%. Key financial highlights compared to the same period in 2015; Net operating income down 11% to QAR 2,733 million; Net profit of QAR 491 million; Total assets up 4% to QAR 123.9 billion; Customer loans and advances up by 4% to QAR 76 billion; Customers’ deposits up 4% to QAR 66.7 billion and Earnings per share of QAR 1.04.
His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Commercial Bank has proudly served the financial needs of its customers for over 40 years by always looking forward to the future. I, together with my fellow Board members, are resolved to maintain the development of Commercial Bank. Through our new executive leadership, and under the guidance of the Board, we are taking necessary decisions now to reshape a strong Commercial Bank for the future. Commercial Bank continues to have great potential to generate long term value for our customers and investors. Our decisions now will ensure that we unlock the Bank’s full potential.”
Financial performance
Hussain Al Fardan, Commercial Bank’s Vice Chairman and Managing Director, added, “Commercial Bank reported an operating profit of QAR 1.4 billion for the nine months ended 30 September 2016. During this period, we aligned our local market strategies to the current challenging realities, pursuing only those opportunities which meet our returns criteria. Our discipline will be maintained as we continue to serve our customers.” Net operating income decreased by 11% to QAR 2,733 million for the nine months ended 30 September 2016, down from QAR 3,058 million achieved in the same period in 2015.
Net interest income was QAR 1,800 million for the nine months ended 30 September 2016, 5% lower than the same period of 2015, mainly due to an increase in cost of deposits. Net interest margin decreased to 2.3% as compared to 2.5% in the same period in 2015. Non-interest income was down by 19% to QAR 933 million for the nine months ended 30 September 2016 compared with QAR 1,155 million. The overall decrease in noninterest income was due to lower net fee and commission income. Total operating expenses were up by 2% at QAR 1,235 million for the nine months ended 30 September 2016 compared with QAR 1,256 million for the same period in 2015.
The Bank’s net provisions for loans and advances were QAR 1,108 million for the nine months ended 30 September 2016, up 104% from QAR 544 million for the same period in 2015. The non- performing loan (NPL) ratio has increased to 5.3% at 30 September 2016 compared with 3.6% at the end of September 2015 and the coverage ratio was 78.8% as at 30 September 2016 compared to 81.3% as at 30 September 2015. Impairment provisions on the Bank’s investment portfolio increased to QAR 68 million for the nine months ended 30 September 2016 compared with QAR 25 million for the same period in 2015.
Commercial Bank delivered balance sheet growth of 4% at the end of September 2016 with total assets at QAR 123.9 billion, compared to QAR 119.2 billion at the end of September 2015. Total asset growth was driven mainly by an increase of QAR 2.6 billion in loans and advances and QAR 3.6 billion in due from banks and offset by lower investment in securities by QAR 2 billion. Loans and advances to customers were up by 4% to QAR 75.9 billion at 30 September 2016 compared with QAR 73.4 billion at the end of September 2015. The growth in lending has been generated, mainly in Services and Commercial Sectors.
Investment securities was down 12% to QAR 16.2 billion as at 30 September 2016 compared with QAR 18.4 billion at the end of September 2015. The decrease is mainly in Treasury bills issued by the Central Bank. Customers’ deposits increased by 4% to QAR 66.7 billion at 30 September 2016, compared with QAR 64.1 billion as at 30 September 2015. The increase was mainly in time deposits. Joseph Abraham, Commercial Bank’s Chief Executive Officer, commented, “Since joining Commercial Bank in July, we are completing a review of the Bank’s strategy, performance and future direction and we will update the market with the results of our review later this year.
However, one clear action became evident early in the process, which was the need for us to recognize a number of non-performing loans. The decision we have taken to provide for an additional QAR 505 million of loans in the third quarter has consequently impacted our financials. Both the Board and the Bank’s leadership team view this as the necessary first step in aligning the business for the current and future economic environment and ensuring Commercial Bank builds sustainable earnings and is well positioned for the future.” He added, “During the period, we continued to manage the business conservatively, reflecting both the challenges and opportunities of the current market. Qatar generated a solid financial performance excluding provisioning with QAR 431 million operating profit for the third quarter. Our Turkish subsidiary, ABank, has been aligned more closely in its working with Commercial Bank and with the injection of new equity and a Tier 2 issuance raised in the first half of the year, we had the funds to pursue loans in the corporate mid-market. However loan growth was limited as we remained highly selective of opportunities. Most importantly, we brought operational costs down by 5% at ABank during the period. UAB continues to successfully recover as its management team execute upon the realignment of the business to the UAE’s corporate market, whilst NBO in Oman has performed well.”