Commercial Bank has reported about five-fold year-on-year jump in net profit to QR855mn in the first half (H1) of this year.
“The Qatari economy remains extremely resilient, demonstrating sustained gross domestic product growth with Fitch and Moody’s upgrading Qatar’s outlook from negative to stable. In this second year of our five-year plan, the bank has made very good progress in reshaping its business for sustained growth,” Commercial Bank chairman Sheikh Abdullah bin Ali bin Jabor al-Thani said.
Net operating income increased by 3.7% to QR1.83bn. Net interest earnings grew 8.2% to QR1.33bn, driven mainly by strong loan growth. Net interest margin stood at 2.3% for the half year, an increase of 0.1% compared to H1, 2017.
Non-interest income stood at QR504mn. The year-on-year fall was due to lower income from investment securities as equity holdings were scaled down in line with the strategic plan and lower foreign exchange income.
“This quarter, the bank continues to position itself to show significant improved bottom line performance in coming years,” said Hussain Alfardan, Commercial Bank’s vice-chairman.
Total operating expenses were tightly managed at the group level, down 9.7% to QR620mn for the half year ended June 30, 2018. Costs reductions were primarily driven by lower staff and administrative expenses.
The bank’s cost-to-income was brought down to 33.9% in H1 2018 compared to 38.9% in the previous year period.
The group’s net provisions for loans and advances plunged 51.9% to QR462mn in H1, 2018. The non-performing loans ratio fell to 5.39% compared to 5.64% a year ago period. The loan coverage ratio is maintained at 84.2% compared to 84.3% for the same period in 2017.
The group delivered balance sheet growth of 4.8% with total assets at QR139.9bon, driven by an increase of QR3.6bn in loans and advances and QR2.9bn in investment securities.
Loans and advances grew 4.3% to QR87.2bn, mainly for the semi-government and services sectors. The investment securities rose 15.2% to QR21.7bn on government bonds; while customer deposits were up 1% to QR75.1bn. Commercial Bank group chief executive Joseph Abraham said the growth (in net profitability) was driven by the domestic operations and supplemented by Alternatif Bank’s strong top-line performance. Growth in the domestic bank was largely due to its strong market position and brand recognition in Qatar, he added.
“The benefits of our five-year strategic plan and its continued execution are evident in our H1 2018 results,” he said.
Alternatif Bank reported an increase in operating profit to QR147mn, after adjusting for a one off exchange gain of QR53mn in H1 2018, up 14% compared with the same period last year. Loans and advances were up 7%, while deposits grew 25% in H1 2018.
“We continue to closely monitor the challenging macroeconomic conditions in Turkey but have the right strategy and management team in place to manage in the current economic environment and the improved results are evidence of this capability,” Abraham said.
NBO reported a net profit of QR240mn, slightly impacted by challenging market conditions. As for UAB, discussions for the sale of Commercial Bank’s stake have been terminated. “We currently classify as an asset held for sale but will focus on improving the performance of the entity,” he said.
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