The Commercial Bank (P.S.Q.C.), its subsidiaries and associates (Group), announced yesterday a net profit of QR602.7m for the quarter ended March 31, 2021 compared to QR402.1m for the same period in 2020, showing a growth of 50 percent.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said: “Commercial Bank is privileged to have been able to support Qatar, its people and the economy through the challenges of the COVID-19 pandemic.
We implemented several measures to ease the financial stress on our clients such as postponing loan installments and interest payments, providing corporates and SMEs in affected sectors with concessionary interest rates and being one of the largest participants in the National Response Guarantee Programme.”
“We are committed to contributing to the success of Qatar by offering innovative world-class banking solutions in the country.
During the quarter, we were honoured to be recognised as the “Best Bank in Qatar 2021” by Global Finance for the second time and also receive the “Serving Business Owners” and the “Data Management and Security” awards in Private Banking and Wealth Management in Qatar for 2021 from Euromoney.
“The swift and decisive actions taken by Qatar’s leadership to stabilise the economy during the COVID-19 pandemic has positioned it for a sustainable and robust recovery.
This is underpinned by Qatar’s successful vaccination programme and the government’s ongoing investment in infrastructure, including Qatar’s ambitious $28bn plan to expand its liquefied natural gas capacity, cementing its position as the world’s biggest supplier.” H u s s a i n A l f a r d a n ,
Commercial Bank’s Vice Chairman, added, “Commercial Bank continues to attract strong investor confidence, having demonstrated the resilience and agility of its business as we successfully navigated the challenges of the COVID-19 pandemic by leveraging technology and maintaining a prudent risk management approach.
This was demonstrated by the attractive pricing and oversubscription of our inaugural international $500m PNC5 AT1 issuance, the largest size international issuance for an AT1 out of Qatar.”
Operating profit for the Group increased by 8.8 percent to QR795m for the quarter ended March 31, 2021, compared to QR730.4m achieved in the same period in 2020.
Normalized net interest income for the Group increased by 7.4 percent to QR856m (+5.9 percent on reported basis) for the quarter ended March 31, 2021 compared to QR796.7m achieved in the same period in 2020. On normalized basis, net interest margin increased to 2.6 percent for the quarter ended March 31, 2021 compared to 2.5 percent achieved in the same period in 2020.
Although asset yields have reduced, the increase in margins is mainly due to proactive management of the cost of funding. Normalized non-interest income for the Group increased by 12.3 percent to QR230.5m (+210.3 percent on reported basis) for the quarter ended 31 March 2021 compared with QR205.2m achieved in the same period in 2020.
The overall increase in non-interest income was mainly due to the recovery of trading and investment income following the unprecedented volatility in global markets, which adversely affected the comparative period in Q1 2020 due to COVID-19 pandemic.
Normalized total operating expenses increased by 7.4 percent to QR291.6m (107.3 percent on reported basis) for the quarter ended March 31, 2021 compared with QR271.5m in the same period in 2020.
The Group’s net provisions for loans and advances increased by 12.9 percent to QR212.5m for the quarter ended 31 March 2021, from QR188.2m in the same period in 2020.
The increase in provisions was mainly due to higher provisions on NPL customers. The non-performing loan (NPL) ratio decreased to 4.2 percent by 31 March 2021 compared to 5.0 percent in the same period in 2020. The loan coverage ratio was at 105.9 percent by March 31, 2021.
The Group balance sheet has increased by 11.4 percent by March 31, 2021 with total assets at QR163.1bn, compared to QR146.4bn in March 2020.
The increase was mainly due to loans and advances and due from banks. The Group’s loans and advances to customers increased by 12 percent to QR99.4bn by 31 March 2021 compared with QR88.8bn in the same period in 2020. The increase was mainly in the government & public and consumption sectors.
The Group’s investment securities decreased by 2.9 percent to QR25.5 billion by 31 March 2021 compared with QR26.2bn in the same period in 2020. The decrease is mainly due to maturities in Government bonds The Group’s customer deposits increased by 5.8 percent to QR81.8bn by 31 March 2021, compared with QR77.4bn in the same period in 2020.
Low cost deposits have increased by 26.6 percent due to the various cash management initiatives and digital products that the bank offers. S&P revised the Bank’s outlook to positive from stable and affirmed the ‘BBB+/A-2’ ratings.
This indicates the possibility of an upgrade in the next 12 – 24 months. Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented: “Commercial Bank delivered a very positive set of results for the first quarter of 2021. The Group reported a consolidated net profit of QR602.7m for the period up by 50 percent compared to the same period last year.
The Group’s achievements, despite a challenging market environment, reflect the strong execution of our five-year strategic plan, which is now in its final year of implementation. “Group net interest income for the first quarter of 2021 increased by 5.9 percent to QR856.0m compared to the same period last year.
Adjusting for the impact of IFRS 2, net interest income increased by 7.4 percent.
The improvement was driven by the effective management of our cost of funding to improve our net interest margin. “Total fees and other income in Q1 2021 reached QR230.5m, an increase of 12.3 percent on a normalised basis compared to the same period last year, driven by a recovery in FX and trading income as well as investment income following heightened volatility in global capital markets which adversely affected the comparative period in Q1 2020 due to the COVID-19 pandemic.
Consequently, operating income in Q1 2021 increased by 8.4 percent on a normalised basis to QR1.1 billion, compared to the same period last year.
“Consolidated operating profit increased by 8.8 percent during the first quarter of 2021 compared to the same period last year to QR795.0m, driven by a combination of improving NIMs and the increase in total fees and other income.
At the Group level, Commercial Bank maintained a healthy cost to income ratio of 26.8 percent on normalized basis in Q1 2021, whilst the domestic operation in Qatar improved its normalized cost to income ratio to 22.2 percent from 23.3 percent for the previous comparative period as the Bank continues to focus on driving efficiencies by leveraging technology.
“Group loans and advances were QR99.4 billion at the end of Q1 2021, up 12.0 percent compared to the same period in the previous year.
Our customer deposits grew 5.8 percent at QR81.8 billion whilst our focus on low cost deposits continues to yield results, with consolidated lowcost deposits growing 26.6 percent during the period, contributing to the improvement in NIMs. “Alternatif Bank’s performance in the first quarter of 2021 was impacted by increased interest rate and currency volatility in the Turkish market.
Alternatif Bank reported a net loss of QR20.7m during the quarter compared to a profit of QR24.6m for the same period last year.
We remain positive on the outlook for Alternatif Bank for the full year, are committed to our business in Turkey, and see significant opportunities to create value in the long term.
