Doha: The Commercial Bank, its subsidiaries and associates announced yesterday its financial results for the nine months ended September 30, 2022, and reported a net profit of QR2.201bn, an increase of 3.3 percent compared to QR2.131bn for the same period in 2021.
The Group’s normalised operating income stood at QR3.821bn, up by 9.5 percent (+5.6 percent on reported basis), while it also reported a strong capital adequacy ratio of 17.0 percent.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank said: “Commercial Bank’s financial performance in Q3 2022 is a reflection of Qatar’s strong economic indicators and parallels the nation’s positive growth trajectory. In anticipation of the long-awaited 2022 FIFA World Cup, Qatar is projected to benefit greatly from a surge in tourism and investment, reaffirming the World Bank’s latest outlook for Qatar’s economy as the fastest growing in the GCC. This is in addition to Qatar’s focus on leveraging its position as the foremost LNG producer to shield against global supply volatility”.
Hussain Alfardan, Commercial Bank’s Vice-Chairman added: “Commercial Bank has achieved another quarter of positive financial and operational performance, reflecting its resilience against global economic uncertainty. This is reinforced by the Bank’s continued investment in digital to deliver best-in-class services to clients and customers. The Bank also continues to benefit from Qatar’s strong economy and this should only increase with the onset of the 2022 FIFA World Cup and its positive impact on the country”.
Operating profit for the Group increased by 12.8 percent to QR2.958bn for the nine months ended September 30, 2022, compared with QR2.623bn achieved in the same period in 2021.
Net interest income for the Group rose by 10.5 percent to QR3.016bn from QR2.730bn, while Net interest margin grew to 2.8 percent for the first nine months of the year, compared with 2.6 percent in the same period last year. The increase in margins is mainly driven by higher growth in interest income as compared to interest expense.
Normalised non-interest income for the Group increased by 5.9 percent to QR804.5m (-7.7 percent on reported basis) for the nine months ended September 30, 2022 compared with QR759.7 million achieved in the same period in 2021. Although investment income is negative due to market volatility, the overall increase in normalised non-interest income was mainly due to higher FX and trading income.
Normalised total operating expenses decreased by 0.4 percent to QR862.3m (+11.3 percent on a reported basis) for the nine months ended September 30, 2022 compared with QR866.2m in the same period in 2021. The Group’s net provisions for loans and advances increased by 27.1 percent to QR706.5m during the first nine months of 2022, from QR556.0m in the same period last year. The increase in provisions was mainly due to continued prudent provisioning on NPL customers. Although non-performing loan (NPL) ratio increased to 4.5 percent at September 30, 2022 from 4.0 percent at September 30, 2021, NPL ratio remained the same from June 30, 2022. Loan coverage ratio decreased to 107.6 percent at September 30, 2022 from 115.9 percent at September 30, 2021, however it increased from 103.2 percent in June 2022.
The Group balance sheet has increased by 4.1 percent as at September 30, 2022 with total assets at QR172.1bn, compared with QR165.3bn in September 2021. The increase was mainly in due from banks and investment securities.
The Group’s loans and advances to customers decreased by 2.6 percent to QR98.4bn at September 30, 2022 compared with QR101.1bn in September 2021. The overall loan book was impacted by the government repayments of temporary overdrafts, despite growth in private sector loans by 2.0 percent.
The Group’s investment securities increased by 11.9 percent to QR29.9bn at September 30, 2022 compared with QR26.7bn in the same period in 2021 mainly due to increase in government bonds.
The Group’s customer deposits increased by 6.9 percent to QR86.2bn at September 30, 2022, compared with QR80.7bn in the same period in 2021. Low cost deposits grew by 11.2 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 solid set of results for the nine months ended September 30, 2022, maintaining the momentum from the first half, as we make good progress on our strategy. The Group reported consolidated net profit of QR2.2bn for the period, up 3.3 percent compared to the same period last year, driven mainly by an improvement in net interest income and increased contributions from our associates.
“Group net interest income for the nine months ending September 30, 2022 increased by 10.5 percent to QR3.0bn compared to the same period last year. The growth was driven mainly by asset repricing due to a rising interest rate environment, reflecting positively on the interest income which was up 16.5 percent. Normalised total fees and other income witnessed a healthy growth of 5.9 percent to QR804.5m compared to the same period last year, resulting in normalised total operating income increasing by 9.5 percent,” he added.
Abraham said on a normalised basis, the Group’s cost-to-income ratio improved to 22.6 percent from 24.8 percent during the same period last year on the back of operating income growth.
“Consequently, operating profit in the first nine months of 2022 increased by 12.8 percent to QR3.0bn 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 QR98.4bn as at September 30, 2022, down 2.6 percent compared to the same period last year mainly on account of government repayments due to the strong fiscal position,” he added.
Abraham further noted: “The Domestic Bank improved its normalised cost to income ratio to 19.8 percent, down from 20.7 percent during the same period last year as the bank continues to focus on driving efficiencies through technology. Our associates continue to deliver improving performance with net profit from associates increasing to QR166.0m, up by 72.2 percent compared to the same period last year.
Alternatif Bank reported net profit of QR131.3m for the first nine months of 2022 compared to a net profit of QR2.5m last year, mainly driven by higher net interest income. With the hyperinflation adjustment, the net contribution of Alternatif Bank was QR53.0m,” he added.
