The Commercial Bank Group has reported a 21% year-on-year jump in net profit to QR2.02bn in 2019 and suggested a 20% cash dividend.
The financials and proposed dividend distribution are subject to the Qatar Central Bank approval and endorsement by shareholders at the bank’s annual general meeting.
“Commercial Bank, a leading financial institution in the country, sees great potential to support the government with its economic diversification agenda while also supporting local private enterprises with their banking needs. The bank continues to invest in technology and people to deliver world class financing solutions in Qatar,” said Sheikh Abdulla bin Ali bin Jabor al-Thani, its chairman.
Net interest income for the group rose 19% to QR2.96bn in 2019 and net interest margin improved to 2.5% against 2.1% a year ago.
“The increase in margins is mainly due to lower cost of funds as we dynamically managed our liability book in a falling interest rate environment through a change in liability book mix. Within the asset book, the investment book yields improved,” said Hussain Alfardan, Commercial Bank’s vice chairman.
Non-interest income grew 35% to QR1.38bn in 2019 on jump in net fee and commission income, mainly from cards and transactional banking, foreign exchange earnings and income from investment securities.
Total operating expenses grew at a group level, up 5%, to QR1.23bn in 2019, driven by staff expenses due to the IFRS 2 accounting of its performance rights (share options) granted to staff.
The group’s net provisions fell 22% to QR653.7mn in 2019. The non-performing loan ratio declined to 4.9% compared to 5.6% a year ago. The loan coverage ratio increased to 82.1% against 78.6% in 2018. The group impaired its associate United Arab Bank (UAB) by QR413.9mn in 2019, on conversion from asset held-for-sale to an associate as the UAB’s book value was higher than the industry standard model used for its valuation.
The group balance sheet rose 9% to QR147.5bn. Loans and advances to customers were up 4% to QR88bn, mainly due to the government and public sector. Investment securities rose 21% to QR26.8bn, primarily in sovereign bonds.
Customer deposits grew 6% to QR76.3bn with the increase mainly in the current and call deposits.
“The excellent result for the year, including the highest net profit achievement in the history of the bank demonstrates the strong execution of Commercial Bank’s five-year strategic plan,” said Joseph Abraham, the group chief executive.
Reiterating the commitment to efficiency and cost optimisation, he said it continued to invest in the processes digitisation and insourced key functions, which led the cost-to-income ratio improve to 28.3% from 33.4%, thus contributing to a 34% rise in operating profit for 2019.
Despite challenging market conditions and lira depreciation by about 21%, Turkey’s Alternatif Bank reported a 10% jump in net profit to QR100mn. It grew customer deposits by 4%; while loans and advances shrank 3% at the end of 2019.
NBO, performed steadily during 2019, reporting a net profit of QR485mn.