Driven by the “strong execution of its strategic plan to build a strong diversified business while provisioning legacy loans and improving cost efficiency,” the Commercial Bank Group posted a net profit of QR604mn in 2017, up 20.4% on the year before.
Total assets of Qatar’s premier bank stood at QR138.4bn in 2017, up 6.2% on the previous year.
Customer loans and advances amounted to QR89.1bn in 2017, up 14.6% on 2016, while customer deposits totalled QR77.6bn in 2017, up 9.5%.
Commercial Bank chairman Sheikh Abdullah bin Ali bin Jabor al-Thani said, “2017 was a challenging year for Qatar and Commercial Bank where both the public and private sectors adapted to a new market environment due to the land, air and sea blockade imposed by Qatar’s neighbours. Both have proven to be resilient. Despite this, Qatar’s robust macro fundamentals have not materially changed, reflected by an AA- rating by Fitch and Aa3 by Moody’s.
“Commercial Bank has successfully concluded the first year of the five-year strategic plan under which it has made good progress in cleaning up its balance sheet, diversifying its loan portfolio geographically and tenor to create a healthier risk profile, and driving efficiencies across the business. Looking ahead, country fundamentals remain strong which will provide opportunities for Commercial Bank as well.
“Qatar’s large financial buffers of approximately $35bn in net international reserves at the Qatar Central Bank and more than $300bn of assets managed by the Qatar Investment Authority provide a strong liquidity position. Spending is set to increase in education, health and construction projects in advance of the FIFA 2022 World Cup for which preparations are on track.”
Commercial Bank vice chairman Hussain al-Fardan said, “The impact of the economic blockade on our business has been minimal, with the actions taken under the strategic plan already showing results and positioning the Bank to show significant improved bottom line performance in the coming years. Consequently, the board of directors has recommended a cash dividend pay-out of 10% of par value or QR1 per share (pay-out ratio of 66%) subject to approval at the Annual General Assembly on March 21.”
The non-performing loan (NPL) ratio increased to 5.65% in 2017 compared to 5.01% for the same period in 2016.
The loan coverage ratio increased to 81% in 2017 compared to 78.9% for the same period in 2016.
Commercial Bank’s group chief executive officer Joseph Abraham said, “Commercial Bank’s results for 2017 demonstrate the impact of strong execution of our strategic plan which called for building a strong diversified business whilst provisioning legacy loans and improving cost efficiency. Despite market conditions, Commercial Bank continued to grow its business with the right sector mix underpinned by faster than market growth of 14.6% in loans and advances to customers and 9.5% in customer deposits. Consolidated net interest income increased 7.6% year-on-year to QR2.52bn.
“Consolidated operating profit increased 13.5% year-on-year to QR2.21bn, driven by overall balance sheet growth and stable margins which reflected the actions taken on the management of liquidity and funding costs. I am also pleased to report a significant decrease in our operating expenses of 19% year-on-year, in line with our strategy to drive efficiencies across the business, streamline processes and reduce costs. Consequently, the bank reported a healthy consolidated cost of income ratio of 37.5%, down from 45.7% in 2016.
“As part of our strategy, we strengthened our balance sheet and made additional provisions on legacy assets, increasing provisioning by 33.8% year-on-year to QR1.7bn. Consolidated net profit was QR604mn in 2017.
“Domestic bank reported an increase of 4.7% in net interest income, while advances to customers grew by 14.5% and customer deposits were up 7.7% for the year that ended in December 2017.
“2017 saw ABank return to profitability to deliver QR49mn in net profit. Loans and advances to customers were up 24% while customer deposits grew 32% year-on-year. We have also appointed a new well-experienced CEO and two new Turkish board directors at ABank, who will lead its strategic re-shape and growth. ABank remains a strategic asset and an important opportunity for us to leverage outside the GCC market.
“For our associates, NBO reported an operating profit of QR416mn and maintains its strong position in the Omani market.
For UAB, as announced earlier, we have entered into an exclusivity agreement to negotiate terms of the potential sale of Commercial Bank’s stake in UAB. An extension on this agreement has been given until February 28. If this happens, capital will be re-deployed to support growth of our other businesses.”
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