The Commercial Bank, its subsidiaries and associates (Group) yesterday reported a net profit of QR901.2m for the first half of 2020, as compared to QR948.2m for the same period in 2019. The bank’s operating profit rose by 17.9 percent to QR1.527bn. Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said: “Through a combination of public health policy and social and economic measures, Qatar continues to demonstrate its ability to navigate the immediate challenges of the COVID-19 pandemic as it lays the foundations to thrive in a post COVID-19 future.”
“This has been recognised by the major international rating agencies with Moody’s affirming Qatar’s ‘AA3’ rating with stable outlook and Fitch affirming the nation’s ‘AA-’ rating with a stable outlook, citing the government’s robust response to limit the fiscal impact of the coronavirus pandemic. As a leading Qatari bank, Commercial Bank is committed to provide world class solutions to the private sector while supporting the government in its economic initiatives.”
Hussain Alfardan, Commercial Bank’s Vice Chairman, added: “The COVID-19 pandemic has accelerated the need for digital banking, and has affirmed our conviction that technology will change the way that people bank around the world. Our early investments in technology made it possible for us to manage our priorities of protecting the health and wellbeing of our employees and customers, while also ensuring business continuity.”
“The automation of our internal processes and versatile technology allowed us to seamlessly transition our employees to working from home while our leading digital platforms enabled us to serve our customers remotely. The recent launch of CB PAY for Merchants, a product which enables customers to pay for goods and services through their mobiles, is yet another example of how we continue to deploy new technology solutions to support our customers’ business activities through these challenging times as we look towards preparing for an increasingly digital future.”
Net interest income for the group increased by 28 percent to QR1.558bn for the first half of the year compared to QR1.217bn achieved in the same period last year. Net interest margin increased to 2.4 percent compared to 2 percent achieved in the same period in 2019. Although asset yields have reduced, the increase in margins is mainly due to proactive management of the cost of funding both in Qatar as well as Turkey. Non-interest income for the group decreased by 17.4 percent to QR519.3m for the first half of 2020 compared with QR628.8m achieved in the same period in 2019. The overall decrease in non-interest income was mainly due to an adverse unrealised mark to market movement in investment and trading income as a result of the unprecedented volatility in the global markets. Total operating expenses reduced by 0.1 percent to QR550.9m for H1, 2020, compared with QR551.7m in the same period last year. T
he group’s net provisions for loans and advances decreased by 48.1 percent to QR225.2m for the first half of the year, from QR433.7m in the same period last year. The nonperforming loan (NPL) ratio increased marginally to 5 percent in H1, 2020 compared to 4.9 percent in H1 2019. The loan coverage ratio was at 90 percent in H1, 2020. The reduction in net provisions is due to strong recoveries in H1, 2020.
The underlying ECL provisions have increased due to the COVID 19 impact. The group balance sheet has increased by 1.8 percent with total assets at QR143.7bn, compared to QR141.2bn in June 2019. The increase was mainly in investments and loans and advances. The Group’s loans and advances to customers increased by 1.5 percent to QR87bn in H1, 2020 compared with QR85.7bn in June 2019. The increase was mainly in the commercial and services sectors.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented: “Commercial Bank delivered a sustainable set of earnings for the first half of 2020, despite the challenging macroeconomic environment resulting from the COVID-19 pandemic. This is testament to the successful implementation of our 5-year strategic plan which has strengthened the bank’s foundation and placed us on a strong footing to navigate the current environment.
“Net profit before associates and taxes increased by 42 percent to QR1.2bn during the period, supported by an expansion in NIMs and reduced net loan provisioning despite higher gross provisions, as we provisioned prudently for the COVID-19 impacts as the net provisions were benefited by strong recoveries. Our consolidated net profit declined 5 percent to QR901.2m in H1, 2020 as we took a prudent approach in the accounting of our associates”.
The group’s investment securities increased by 14.1 percent to QR26.8bn in H1, 2020 compared with QR23.5bn in H1 2019. While the group’s customer deposits also increased by 0.4 percent to QR77.7bn in H1 2020, compared with QR77.4bn in June 2019.
