Doha: The Commercial Bank (P.S.Q.C.) (“the Bank”), its subsidiaries and associates (“Group”) announced yesterday reported a net profit of QR1,432.3m for the half year ended 30 June 2022 compared to QR1,327.3m for the same period in 2021, showing a rise of 7.9 percent.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Qatar continued to demonstrate resilience in overcoming the challenges faced by the global economy to report economic growth of 2.5% in the first quarter of 2022 from a year earlier.
Driven by a robust legislative and regulatory framework created by the Qatar government and higher hydrocarbon export realizations, Qatar is projected to be the fastest growing economy in the GCC in 2023 and 2024. With the lead up to the World Cup on track and strong economic fundamentals this continues to support strong investor confidence in the Qatar economy which provides a strong operating environment for Commercial Bank.
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “Commercial Bank is making solid progress with its strategic plan, and the strong investor and financial counterpart confidence to the Bank has been recognized by the market through our recent USD 750 million Asian syndicated term loan facility, which was oversubscribed 2.35x. This confidence is validated by our constant ability to deliver innovative banking services and solutions to our customer base. Additionally, with the upcoming FIFA World Cup, which is expected to inject as much as $17bn into the Qatari economy, Commercial Bank is well positioned to continue delivering growth.”
Operating profit for the Group increased by 15.9 percent to QR1,975.7m for the six months ended 30 June 2022, compared with QR1,705.0m achieved in the same period in 2021. Net interest income for the Group increased by 10.0 percent to QR1,956.2m for the six months ended 30 June 2022 compared with QR1,779.0m achieved in the same period in 2021. Net interest margin increased to 2.8 percent for the six months ended 30 June 2022 compared with 2.6 percent achieved in the same period in 2021. The increase in margins is mainly driven by asset repricing due to rising interest rate environment.
Normalized non-interest income for the Group increased by 18.0 percent to QR595.6m (+2.2 percent on reported basis) for six months ended 30 June 2022 compared with QR505.0m achieved in same period in 2021. The overall increase in non-interest income was mainly due to higher FX and trading income.
Normalized total operating expenses decreased by 0.5 percent to QR576.2m (-10.7 percent on a reported basis) for the six months ended 30 June 2022 compared with QR578.9m in same period in 2021.
The Group’s net provisions for loans and advances increased by 20.8 percent to QR501.8m for the six months 30 June 2022, from QR415.2m in the same period in 2021. The increase in provisions was mainly due to continued prudent provisioning on NPL customers. The non-performing loan (NPL) ratio increased to 4.5 percent at 30 June 2022 from 4.1 percent at 30 June 2021. The loan coverage ratio decreased to 103.2 percent at 30 June 2022 compared with 112.1 percent at 30 June 2021, but increased from 100.2 percent in March 2022.
The Group balance sheet has increased by 8.8 percent as at 30 June 2022 with total assets at QR176.4bn, compared with QR162.1bn in June 2021. The increase was mainly in due from banks and investment securities.
The Group’s loans and advances to customers increased by 0.6 percent to QR101.2bn at 30 June 2022 compared with QR100.6bn in June 2021. The overall loan growth was impacted by the government repayments of temporary overdrafts, despite growth in private sector loans by 7.2 percent. The Group’s investment securities increased by 16.1 percent to QR29.4bn at 30 June 2022 compared with QR25.3bn in the same period in 2021.
The Group’s customer deposits increased by 8.5 percent to QR89.3bn at 30 June 2022, compared with QR82.3bn in the same period in 2021. Low cost deposits increased by 11.0 percent due to the various cash management initiatives and digital products that the Bank offers.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank reported a positive set of results for the six months ended 30 June 2022, maintaining the momentum from the first quarter, as we make good progress on our strategy. “The Group reported consolidated net profit of QR1.4bn for the period, up 7.9 percent compared to the same period last year, mainly driven by an improvement in net interest income and increased contributions from our associates.
“Group net interest income for the six months ending 30 June 2022 increased by 10.0 percent to QR2.0bn compared to the same period last year. The growth was driven mainly by asset repricing due to rising interest rate environment, reflecting positively on the interest income which was up 10.7 percent. Additionally, net interest margin improved to 2.8 percent from 2.6 percent.
“Normalized total fees and other income witnessed a healthy growth of 18.0 percent to QR595.6m compared to the same period last year, mainly driven by an increase in FX and trading income. Investment income declined by QR122.6m due to the heightened volatility in global capital markets. Despite this, normalized total operating income increased 11.7 percent.
“On normalized basis, the Group’s cost-to-income ratio improved to 22.6 percent from 25.3 percent during the same period last year on the back of operating income growth.
“Consequently, operating profit in the first six months of 2022 increased by 15.9 percent to QR2.0bn compared to the same period last year.
“Net provisions are in line with the guidance provided on cost of risk as we continue our conservative provisioning approach.
“Group loans and advances were QR101.2bn for the first six months of 2022, up 0.6 percent compared to the same period last year mainly driven by growth in private sector loans mainly in commercial and services sectors. The overall loan growth was impacted by the government repayments due to the strong fiscal position.
“Customer deposits increased to QR89.3bn, up by 8.5 percent compared to the same period last year. Low-cost deposits grew by 11.0 percent, which contributed positively to our net interest margin.
“The Domestic Bank improved its normalized cost to income ratio to 20.0 percent, down from 21.1 percent during the same period last year as the bank continues to focus on driving efficiencies through technology.
“Our associates continue to deliver better performance. Net profit from associates increased to QR106.4m, up by 68.2 percent compared to the same period last year.
“During the period, the Group applied hyperinflationary accounting to Alternatif Bank in accordance with the requirements of International Accounting Standards (IAS) 29, which resulted in a non-cash “net monetary loss” of QR69.2m reported in the Group’s income statement. This accounting adjustment was neutral on the Group’s total equity.
“Alternatif Bank reported net profit of QR84.0m for the first half of 2022 compared to a net loss of QR13.8m last year, mainly driven by an improvement in FX and trading income. With the hyperinflation adjustment, the net contribution of Alternatif Bank was QR58.6m.”
