The Commercial Bank, its subsidiaries and associates, reported a net profit of QR702.3 million for the first quarter of 2022, up 16.5 percent from QR602.7 million recorded for the same period in 2021.
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 global economies during the past two years, whilst retaining its title as one of the region’s strongest economies and among the most promising economies, globally.
Furthermore, Qatar’s GDP is forecast to rise from $161 billion in 2021 to $201 billion in 2025, and confidence in Qatar’s economy is also witnessing significant growth following the government’s legislative and regulatory efforts to attract businesses – factors which augur well for Commercial Bank and have contributed to the Bank’s strong start to 2022.”
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “With the upcoming FIFA World Cup, Commercial Bank has continued to invest in upscaling its digital service offering, to ensure seamless banking for all our existing and new customers. In line with this, Commercial Bank was recognised by several organisations for our position as a leader in banking innovation.
In March 2022, Commercial Bank’s shareholders approved to increase the non-Qatari ownership threshold in the capital of the Bank up to 100%, a step that will further help to improve the attractiveness of the Qatar stock market and Commercial Bank shares as the 100% FOL is often a requirement for many investment funds to enter a market and invest.”
Operating profit for the Group increased by 18.6 percent to QR942.5 million for the quarter ended 31 March 2022, compared with QR795.0 million achieved in the same period in 2021.
Net interest income for the Group increased by 11.4 percent to QR953.8 million for the quarter ended 31 March 2022 compared with QR856 million achieved in the same period in 2021. Net interest margin increased to 2.8 percent for the quarter ended 31 March 2022 compared with 2.6 percent achieved in the same period in 2021. The increase in margins is mainly due to proactive management of the cost of funding.
Normalized non-interest income for the Group increased by 13.8 percent to QR262.4 million (+22.5% on reported basis) for the quarter ended 31 March 2022 compared with QR230.5 million achieved in the same period in 2021. The overall increase in non-interest income was mainly due to higher FX and trading income as well as an increase in fees income.
Normalized total operating expenses decreased by 6.1 percent to QR273.7 million (+5.1% on a reported basis) for the quarter ended 31 March 2022 compared with QR291.6 million in the same period in 2021.
The Group’s net provisions for loans and advances increased by 11.2 percent to QR236.2 million for the quarter ended 31 March 2022, from QR212.5 million in the same period in 2021. The increase in provisions was mainly due continued prudent provisioning on NPL customers. The non-performing loan (NPL) ratio increased to 4.6 percent at 31 March 2022 from 4.2 percent at 31 March 2021. However this has decreased from 4.7 percent in December 2021. The loan coverage ratio decreased to 100.2 percent at 31 March 2022 compared with 105.9 percent at 31 March 2021, but increased from 97.4 percent in December 2021.
The Group balance sheet has increased by 5.1 percent as at 31 March 2022 with total assets at QR171.5 billion, compared with QR163.1 billion in March 2021. The increase was mainly due to increase in balances with Central Bank and investment securities.
The Group’s loans and advances to customers decreased by 1 percent to QR98.4 billion at 31 March 2022 compared with QR99.4 billion in the same period in 2021. The decrease was mainly due to Turkish lira conversion to Qatari Riyals. Excluding FX impact, the underlying loans increased by 1% despite the payout of the temporary overdraft by the Government.
The Group’s investment securities increased by 11.1 percent to QR28.3 billion at 31 March 2022 compared with QR25.5 billion in the same period in 2021.
The Group’s customer deposits increased by 3.3 percent to QR84.5 billion at 31 March 2022, compared with QR81.8 billion in the same period in 2021. The increase is mainly in low cost deposits which increased by 10.9 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, “I am pleased to report a good start to the year as our financial performance for the first quarter demonstrates the strong execution of our strategy.
“The Group reported consolidated net profit of QR702.3 million for the period, up 16.5 percent compared to the same period last year, driven by an improvement in net interest income.
“Group net interest income for Q1 2022 increased by 11.4 percent to QR953.8 million compared to the same period last year. The increase was driven by continued effective management of cost of funding and improvement in interest income.
“Normalized total fees and other income in Q1 2022 stood at QR262.4 million, an increase of 13.8 percent compared to the same period last year, driven by an increase in FX and trading income. Overall operating income increased by 11.9 percent.
“Normalized operating expenses reduced by 6.1 percent reflecting strong jaws and positively on the cost-to-income ratio which reduced to 22.5 percent from 26.8 percent during the same period last year. Consequently, operating profit in Q1 2022 increased 18.6 percent to QR942.5 million, compared to the same period last year.
“The Domestic Bank improved its normalized cost to income ratio to 20.4 percent, down from 22.2 percent for the same period last year as the Bank continues to focus on improving income and driving efficiencies.
“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 QR98.4 billion at the end of Q1 2022, down 1.0 percent compared to the same period in the previous year. This was mainly driven by a reduction in government and public sector loans due to the strong fiscal position and also forex translation moves in Turkey. Net of the forex adjustment, loans still grew by 1 percent.
“Customer deposits increased to QR84.5 billion, up by 3.3 percent which is driven by low-cost deposits which increased by 10.9 percent. Commercial Bank is fully compliant with the new loan-to-deposit ratio that has been issued by Qatar Central Bank.
“Alternatif Bank’s performance in the first quarter of 2022 showed improved profitability. The bank reported a net profit of QR34.4 million during the period compared to a net loss of QR20.7 million for the same period in 2021.
“The impact from our share of associates in 2022 improved by 70.6 percent compared to 2021 driven mainly by improved performance at our associate banks, National Bank of Oman and United Arab Bank. We expect our associate banks to continue to improve their performance and contribution during the year.”