Commercial Bank Group posted a net profit of QR1.3bn in 2020 compared to QR2.02bn in 2019.
The premier bank’s operating profit went up to QR3.14bn in 2020, a growth of 14.1% on normalised basis.
Commercial Bank said its total assets rose 4.1% to QR153.6bn last year.
The bank’s board of directors has proposed a dividend distribution to shareholders of QR0.1 per share, i.e. 10% of the nominal share value.
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 chairman Sheikh Abdulla bin Ali bin Jabor al-Thani said, “Qatar has again demonstrated resilience with its successful management of the Covid-19 pandemic, thanks to the efforts of our leadership and the measures implemented to mitigate the pandemic’s health and economic impact on the country.
“Consequently, the International Monetary Fund (IMF) has predicted that Qatar’s GDP will grow 2.7% in 2021. The IMF also noted that the country’s prudent budgetary decisions will keep its fiscal gap in check.
“During these challenging times, it has been a key priority for Commercial Bank to support the nation’s economy by postponing loan instalments and interest payments, providing corporates and SMEs in affected sectors with concessionary interest rates and participating in the National Response Guarantee programme. Commercial Bank remains committed to using its resources to bring world-class banking solutions and innovative products to Qatar in support of the private sector.”
Commercial Bank vice chairman Hussain Alfardan added, “The implementation of Commercial Bank’s five-year strategic plan has provided us with a strong platform from which to respond to the Covid-19 pandemic. Our investments in technology enabled us to seamlessly transition to working from home during movement restrictions whilst providing our customers with uninterrupted access to our services through enhanced digital services.
“Furthermore, focusing on prudent risk management allowed us to manage our risk profile during these unusual times as recognised by Fitch Ratings, which affirmed our ‘A’ long-term issuer default rating with a stable outlook for the Bank.”
Commercial Bank’s group chief executive officer Joseph Abraham said, “It was a challenging environment brought on by the Covid-19 pandemic, but the bank demonstrated resilience at the business and operating income level a result of the strong execution of our five-year strategic plan, which enabled us to swiftly adapt to the new operating environment.
“The Group reported normalised operating profit of QR3.1bn in 2020, up 14.1% compared to the previous year, driven by improved consolidated net interest income. On an actual basis, consolidated operating profit was up by 0.7%. Consolidated net profit declined 35.6% to QR1.3bn, impacted by impairments to our associate UAB and increased provisioning due to the Covid-19 pandemic, as well as difficult market conditions in Turkey, which impacted Alternatif Bank.
“Group net interest income for 2020 increased by 4.6% to QR3.1bn compared to the same period last year. Adjusting for the impact of IFRS 2, FY 2020 net interest income increased 17.7%. The improvement was driven by the effective management of our cost of funding to ensure that our cost of deposits declined faster that our asset yields.
“Consequently, despite a reduction in total fees and other income due to lower spends on credit cards due to reduced international travel, total operating income increased 9.9% on a normalised basis. On an actual basis, operating income for 2020 was QR4.2bn compared with QR4.3bn in the previous year.
“Total fees and other income declined 6.8% on a normalised basis in 2020 compared to the previous year, due to reduced card spends as mentioned above and also a reduction in investment income. The decline in investment income was partially offset by gains in FX and trading income as our remittance and trade services continued to expand. On an actual basis, total fees and other income in 2020 was QR1.1bn.
“Normalised consolidated operating profit increased 14.1% in 2020 compared to the previous year. On an actual basis, consolidated operating profit was stable at QR3.1bn. Growth was driven by improving NIMs and our focus on cost optimisation. Commercial Bank’s cost to income ratio improved to 25.9% from 28.3% in the previous year, as we continue to invest in technology and streamline our operations.
Abraham stated, “Net provisioning in 2020 increased 56.6% compared to the previous year despite strong recoveries, reflecting our prudent approach of factoring in the Covid-19 impact on our ECL models. Due to these increased Covid model impacts, cost of risk was 95 bps higher than the previous year of 68 bps. Our NPL ratio improved to 4.3% in 2020 compared to 4.9% in the previous year due to resolution of certain cases.
“Group loans and advances were QR96.7bn at the end of 2020, up 9.9% compared to the same period in the previous year supported by strong public sector borrowing. Our customer deposits were stable at QR75.8bn, whilst our focus on low-cost deposits continues to yield results, with consolidated low-cost deposits growing 24.8% during the period, contributing to the improvement in NIMs.
“Alternatif Bank’s performance in 2020 was impacted by the softening of the Turkish economy and an 18.5% depreciation of the Turkish lira during the period. Despite these challenges, Alternatif Bank reported a profit of QR57.5mn during the year supported by an 11% improvement in operating expenses as the bank focused on driving efficiency.”
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