Maintaining strong performance while successfully implementing its five-year strategic plan, Commercial Bank Group achieved a consolidated net profit of QR3,010.2mn, marking a 7.1% increase from QR2,811.1mn reported in 2022.
Commercial Bank’s Board of Directors proposed a dividend distribution to shareholders of QR0.25 per share, which is 25% of the nominal share value.
The financials and proposed dividend distribution are subject to Qatar Central Bank approval and endorsement by shareholders at the Annual General Meeting, Commercial Bank said on Wednesday.
Commercial Bank chairman Sheikh Abdulla bin Ali bin Jabor al-Thani said, “The confirmation of Commercial Bank’s 'A-' rating with a positive outlook by Fitch, and 'A-' rating with a stable outlook by S&P, reflects the proactive execution of our strategic plan and the strength of Qatar’s Government and economy.
“In line with the Qatar National Vision 2030, Commercial Bank launched its inaugural Sustainable Finance Framework, which will further our commitment to support projects that enable the transition to a low carbon and climate resilient economy, as well as a positive societal impact.
“Our commitment to investing in technology and innovation has earned a number of awards, including ‘Fastest-Growing Partner in Qatar” and the ‘Highest Spend per Card in Qatar’ at the Mastercard MENA Business Forum, highlighting our influence in the Middle East's cards and payments industry.”
Commercial Bank vice-chairman Hussain Ibrahim Alfardan said, “We are pleased to report Commercial Bank’s good performance for the fiscal year of 2023. Substantial growth in crucial segments has played a vital role in achieving strong financial results, highlighting our effectiveness in meeting our customers’ needs.
“Looking ahead, our commitment remains strong as we work towards solidifying Commercial Bank's position as a leading banking provider in the region. We look forward to another year of achievements and contributing towards the growth and prosperity of Qatar's economy.”
The Group balance sheet decreased by 2.8% (as on December 31, 2023) with total assets at QR164.6bn compared with QR169.1bn in December 2022.
The decrease was mainly due to decrease in loans and advances to customers and due from banks.
The group’s loans and advances to customers decreased by 6.7% to QR91.5bn (as at December 31, 2023) compared to QR98bn in December 2022. This is due to Alternatif Bank, whose loans decreased due to the Turkish lira depreciation.
At domestic level, the decrease was partly due to government repayments of temporary overdrafts.
The Group’s customer deposits decreased by 8% to QR76.5bn (as on December 31, 2023), compared with QR83.2bn in the same period in 2022. The decrease is mainly in current and call deposits.
The Group’s net provisions for loans increased by 0.3% to QR990.7mn for the year ended in December 2023, from QR987.6mn in the same period in 2022.
Despite strong recoveries, Commercial Bank Group continued with prudent provisioning on NPL customers. Non-performing loan (NPL) ratio stood at 5.9% (as on December 31, 2023) from 5.3% (as on September 30, 2023) and 4.9% on December 31, 2022.
The reason for increase in NPL is due to decrease in the loans and advances exposure during the year.
Commercial Bank Group Chief Executive Officer Joseph Abraham commented, “Throughout 2023, Commercial Bank maintained its strong performance while successfully implementing our five-year strategic plan.
“In 2023, the Group achieved a consolidated net profit of QR3,010.2mn, marking a 7.1% increase from the QR2,811.1mn reported in 2022. This growth was largely driven by continuing increase in operating income, which increased by QR195.5mn as compared to 2022.
“The Group's net interest income for the year 2023 saw a slight decrease of 2.4%, to reach QR3,867.3mn, down from QR3,963.1mn in 2022. Although loan balance reduced by 6.7% year on year, the decrease in net interest income was 2.4% as we managed to increase asset yield whilst continue to manage interest cost.
“Overall fees and other income increased by 21.9% to QR1,622.2mn compared to QR1,330.9mn in 2022. This rise was mainly driven by higher investment income.
“In 2023, the Group saw an increase in its cost-to-income ratio, reaching 26.2% from 21.5% in 2022. This rise was mainly due to elevated operating expenses incurred at Alternatif Bank. The domestic bank’s cost-to-income ratio remained low at 22.2%.
“The gross cost of risk increased by one basis points (bps) to 144 bps as compared to 143 bps, aligning with our 2023 guidance. However, the net cost of risk decreased by 16 bps to 105 bps as compared to 121 bps in 2022, due to strong recoveries during the year.
“Our associates continue to deliver good performance, with our profit from share of associates growing by 32.3% in 2023, amounting to QR294.2mn, up from QR222.3mn in 2022.
“The Group remains in adherence to the International Accounting Standards (IAS) 29, which require the application of hyperinflationary accounting for Alternatif Bank. As a result, a non-cash "net monetary loss" of QR335mn was recorded in the Group's income statement for the period as compared to QR189.4mn in the corresponding period in 2022.
“The domestic bank’s net profit showed a growth of 9.8%, rising to QR2,860mn from QR2,603.6mn in 2022. This increase is due to higher investment income and higher recoveries during the year.
“During the year, Alternatif Bank witnessed a substantial upturn in net profit, achieving QR83.6mn in contrast to QR31.5mn net profit in the previous year. This improvement can be attributed to an improved FX and trading income, which experienced an increase of 842.8% to QR417.5mn compared to QR44.3mn in the same period last year.”
