Commercialbank posts QR1.64bn profit

By Pratap John/Chief Business Reporter

The bank’s 2010 financial results announced yesterday showed an improved fourth quarter net profit of QR309mn, up 66% on the same period in 2009.

Commercialbank’s customer loans and advances rose 5% to QR33.6bn while customer deposits totalled QR33.3bn, up 27% on 2009.

The bank’s total assets were up 9% to QR62.5bn in December 2010 compared with the same period in 2009 reflecting the increase in loans and advances to customers and higher balances with the Qatar Central Bank.

Commercialbank chairman HE Abdulla bin Khalifa al-Attiyah said, "The bank has faced another challenging year in which we have seen the lingering effects of the global financial downturn continue to impact our performance. The Qatari economy has remained resilient and delivered strong growth supported by the Government’s public sector spending programme.

"During the year Qatar became the world’s leading producer of LNG and won the right to host the FIFA World Cup in 2022 through the visionary leadership of HH the Emir and HH the Heir Apparent. These major achievements will enable the Qatar economy to continue to develop and grow with Commercialbank continuing to play an integral part.”

Hussein Alfardan, Commercialbank managing director said, "Commercialbank has delivered strong results in 2010 reflecting the successful realignment of the business, which has enabled us to deepen our presence in both the domestic corporate and retail businesses. This has also developed stronger relationships in the government and public sector based on the solid foundation provided by the successful implementation of the bank’s revised risk based strategy.”

The results indicated the net interest income was up 7% to QR1.7bn in 2010 compared with QR1.58bn in 2009.

Net provision for loans and advances was reduced by QR294mn to QR167mn in 2010 compared with QR461mn in 2009.

The bank’s asset quality remains ‘strong’ with the non-performing loan (NPL) ratio - on a 90-day basis - decreasing to 3.16% in December, 2010 from 3.56% in December, 2009, but was up from 2.96% in September 2010. The reduction in the NPL ratio reflects the overall reduction in non-performing loans since December 31, 2009 and the growth in lending to customers.

The rise in the NPL ratio in the fourth quarter has been predominantly due to the increase in interest in suspense and the reduction in the level of lending, the bank said.

Commercialbank has also set aside a risk reserve against its lending as part of shareholders’ equity; on December 31, 2010 the risk reserve was QR648mn, representing 2% of total lending, and providing loan loss coverage of 149% inclusive of the impairment provision.

Commercialbank’s capital adequacy ratio was 18.5% in December, 2010 compared with 18.9% at the end of 2009. The bank’s capital position is strong and well above the QCB’s required minimum level of 10%.

Commercialbank’s group chief executive officer Andrew Stevens said, "The bank has made genuine and sustainable progress in 2010. We have shaped our strategy to counter and adapt to difficult market conditions and capture opportunities, which have delivered strong results with encouraging trends in both lending and asset quality.

Stevens said the outlook for 2011 is ‘positive’ and the bank is ‘well capitalised and strongly positioned’ to take advantage of growth opportunities whilst retaining focus on balance sheet management and maintaining asset quality. "We will balance rigorous cost management with prudent investment in enhancing our customers’ experience and developing synergies with our alliance partners,” he said.