Commercial Bank half-yearly net profit tops QR901mn
July 23 2020 08:08 PM
Commercial Bank half-yearly net profit tops QR901mn
Commercial Bank half-yearly net profit tops QR901mn

*As a leading Qatari lender, Commercial Bank is committed to providing world-class solutions to the private sector while supporting the government in its economic initiatives, says chairman Sheikh Abdulla bin Ali bin Jabor al-Thani

Commercial Bank has posted a half-yearly net profit of QR901.2mn while the group's balance sheet increased by 1.8% with total assets at QR143.7bn compared to QR141.2bn in June.

Commercial Bank chairman Sheikh Abdulla bin Ali bin Jabor al-Thani said, “Through a combination of public health policy and social and economic measures, Qatar continues to demonstrate its ability to navigate the immediate challenges of the Covid-19 pandemic as it lays the foundations to thrive in a post Covid-19 future.

“This has been recognised by the major international rating agencies with Moody’s affirming Qatar’s ‘AA3’ rating with stable outlook and Fitch affirming the nation’s 'AA-' rating with a stable outlook, citing the government’s robust response to limit the fiscal impact of the coronavirus pandemic.

“As a leading Qatari bank, Commercial Bank is committed to provide world class solutions to the private sector while supporting the government in its economic initiatives.”

Commercial Bank vice-chairman Hussain Alfardan said, “The Covid-19 pandemic has accelerated the need for digital banking, and has affirmed our conviction that technology will change the way that people bank around the world. Our early investments in technology made it possible for us to manage our priorities of protecting the health and wellbeing of our employees and customers, while also ensuring business continuity. The automation of our internal processes and versatile technology allowed us to seamlessly transition our employees to working from home while our leading digital platforms enabled us to serve our customers remotely.

“The recent launch of ‘CB PAY’ for Merchants, a product which enables customers to pay for goods and services through their mobiles, is yet another example of how we continue to deploy new technology solutions to support our customers’ business activities through these challenging times as we look towards preparing for an increasingly digital future.”

The operating profit for the group increased by 17.9% to QR1.52bn for the half year that ended in June compared to QR1.29bn achieved in the same period in 2019.

All the three rating agencies have affirmed Commercial Bank’s ratings and the outlook remains at ‘stable’.

Commercial Bank group chief executive officer Joseph Abraham commented, “Commercial Bank delivered a sustainable set of earnings for the first half of 2020, despite the challenging macroeconomic environment resulting from the Covid-19 pandemic. This is testament to the successful implementation of our five-year strategic plan, which has strengthened the Bank’s foundation and placed us on a strong footing to navigate the current environment.

“Net profit before associates and taxes increased by 42% to QR1.2bn during the period, supported by an expansion in NIMs and reduced net loan provisioning despite higher gross provisions, as we provisioned prudently for the Covid-19 impacts as the net provisions were benefited by strong recoveries. Our consolidated net profit declined 5% to QR901.2mn in H1, 2020 as we took a prudent approach in the accounting of our associates.

“Net interest income grew 28% to QR1.6bn during the first half of 2020 compared to the same period last year, offsetting the declines in total fees due to Covid-19 related concessions, as we effectively managed our cost of funds and increased the proportion of our low-cost deposits. Total fees and other income were down 17.4% on a normalised basis mainly on account of investment income volatility in H1 and Covid-19 related fee concessions in transactional banking.

“Operating profit during the first half of 2020 was QR1.5bn, up 17.9% compared to the same period last year driven by the expansion in net interest margins (NIMs) and ongoing cost optimisation initiatives. An integral part of our 5-year strategic plan has been an ongoing focus on investing in the digitisation and automation of our core processes. This enabled us to quickly and seamlessly adapt to the new environment during the Covid-19 pandemic, in addition to optimising our cost base. Operating expenses reduced by 0.1% on a normalised basis and our cost to income ratio further improved to 26.5% on a normalised basis during the first half of 2020, compared to 29.9% for the same period last year.

“Gross loan provisioning during the year increased by 3.5% as we adopted a prudent approach while factoring in the Covid-19 impact on our ECL models. Overall, net loan provisioning declined 48.1% during the first half of 2020 compared to the same period last year due to increased recoveries during the period.

“Loans and advances were QR87bn at the end of the first half of 2020, up 1.5% compared to the same period in the previous year, and customer deposits increased by 0.4% to QR77.7bn. Our focus on low-cost deposits continues to yield results, with low cost deposits growing 11.4% during the period, contributing to the improvement in NIMs.

“The Turkish economy has been impacted by the Covid-19 pandemic, affecting Alternatif Bank’s performance during the period. Whilst the bank reported a 33% decrease in profit on a Turkish lira basis due to an increase in general provisioning on the foreign currency loan book due to the currency depreciation, it reported a net profit of QR38.5mn (H1 2019: QR64.2mn) during the first half of 2020.

“The Qatari riyal results were impacted by the 13.1% depreciation of the Turkish lira. Alternatif Bank’s customer deposits increased by 16.9% while loans and advances increased by 23.1%, compared to the same period previous year.

“The impact from our share of associates during the first half of 2020 was negative as we took a prudent approach in their accounting.”




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