C Bk Qatar S Regulatory News (CBQS)

Commercial Bank of Qatar

Financial Results for the six months to 30 June 2014

Commercial Bank increases half year profit by 3% to QAR 1,051 million

23 July 2014, Doha, Qatar: The Commercial Bank of Qatar Q.S.C. ("Commercial Bank" or "the Bank") and its subsidiaries and associates (together "the Group") announced today its financial results for the six months to 30 June 2014. The Bank delivered a net profit of QAR 1,051 million for the first half of 2014, a 3% increase in profitability compared to the first half of 2013.

Key financial highlights

· Net Operating income up 25% to QAR 1,995 million

· Net profit up 3% to QAR 1,051 million

· Total assets up 32% to QAR 112.4 billion

· Customer loans and advances up 33% at QAR 69.4 billion

· Customers' deposits up 28% to QAR 59.8 billion

· Successful USD 750 million EMTN issuance in June 2014

· Earnings per share of QAR 3.45

Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank said, "Qatar's economy has seen significant local demand drive forecast annual GDP figures up to 6.3% from 4.6% for 2014. Growth is being driven by the government's expenditure on infrastructure to deliver Qatar's National Vision as well as the positive performance of growth markets in the private sector. The Group also continues to benefit from the buoyant market conditions in our operations in Turkey, the UAE and Oman. Commercial Bank's first half performance gives us confidence for our full year performance."

Financial Performance

Mr. Hussain Alfardan, Commercial Bank's Vice Chairman and Managing Director, added, "Our continued investment in the business has seen a strong set of half year results for Commercial Bank. We have delivered good growth in our profitability with a 3% increase in our half year performance to QAR 1,051 million."

Net operating income increased by 25% to QAR 1,995 million in the first half of 2014, up from QAR 1,598 million achieved in the same period in 2013. ABank delivered net operating income of QAR 434 million for the first half of 2014.

Net interest income was QAR 1,273 million for the half-year ended 30 June 2014, 39% higher than in the same period in 2013, reflecting strong growth in lending activities and the consolidation of ABank. ABank contributed QAR 305 million, 24% of the total net interest income. Net interest margin increased to 2.7% as compared to the first quarter of 2014 at 2.6%.

Non-interest income was up 5. 6% to QAR 722 million in the first half of 2014 compared with QAR 684 million for the same period in 2013 with ABank contributing QAR 128 million. The overall increase in non-interest income was due to higher net fee and commission income and was partially offset by lower income from investments securities.

Total operating expenses were up 65% to QAR 828 million in the first half of 2014 compared with QAR 503 million for the same period in 2013. Excluding ABank, expenses increased by 11.6% for the first half of 2014 compared to the same period in 2013 as Commercial Bank continued to invest in its people and infrastructure.

The Bank's net provisions for loans and advances were QAR 257 million for the six months ended 30 June 2014, up from QAR 194 million provided in the same period for 2013. The non-performing loan ratio has increased to 3.82% at 30 June 2014 compared with 3.55% at the end of March 2014 and the coverage ratio has increased to 67.3% as at June 2014 compared to 65.2% in March 2014.

Impairment provisions on the Bank's investment portfolio increased to QAR 29 million for the half year ended 30 June 2014 compared with QAR 21 million for the same period in 2013.

Commercial Bank delivered strong balance sheet growth at the end of the first half of 2014 increasing by 31.5% with total assets at QAR 112.4 billion, which includes QAR 18.8 billion of assets from ABank, compared to QAR 85.4 billion at the same period in 2013. Balance sheet growth was driven mainly by an increase of QAR 17.4 billion in lending to customers combined with an increase of QAR 4.1 billion in Investment securities.

Loans and advances to customers were up by 33% to QAR 69.4 billion at 30 June 2014 compared with QAR 52 billion at the end of June 2013, and up by 4% from QAR 66.9 billion at 31 December 2013. The growth in lending since 30 June 2013 has been generated, mainly, in the Government, Industry and Real Estate Sectors. Loans and advances to customers of QAR 12.6 billion at ABank were included at 30 June 2014.

Investment securities were up by 37.5% to QAR 14.9 billion at 30 June 2014 compared with QAR 10.8 billion at the end of June 2013. The growth in investment securities is mainly in QAR bonds issued by QCB. Investment securities of QAR 2.7 billion at ABank were included at 30 June 2014.

Customers' deposits have grown by 27.6% to QAR 59.8 billion at 30 June 2014, compared with QAR 46.9 billion as at 30 June 2013, supporting Commercial Bank's growth in lending. The increase in deposits has come mainly from higher savings and time deposit balances and the inclusion of QAR 8.8 billion for ABank. This underpins our strategy to ensure continued diversification of our funding base and focus on growing low cost funds.

In June 2014, Commercial Bank announced the successful pricing and closure of an issuance of USD 750 million 5-year senior unsecured notes under its USD 5 billion European Medium Term Note ("EMTN") programme. The EMTN issuance was oversubscribed more than four times and the spread was the tightest achieved by a Qatari five year US dollar issuance since 2007. Half the participants were new investors and the net proceeds of the issue are for general funding purposes to support the strategic growth plans of the Bank.

Mr. Andrew Stevens, Commercial Bank's Group Chief Executive Officer, said, "Commercial Bank is focused on increasing its return on capital to deliver growing shareholder value. This is being generated through the development of sustainable and high quality income from our banking businesses in Qatar, Turkey, the UAE and Oman. Our first half financial results illustrate how we have re-shaped our business to deliver against this strategic objective."

Mr. Abdulla Saleh Al Raisi, Commercial Bank's Chief Executive Officer, commented, "We have continued to make significant progress in implementing our strategy in Qatar during the first half of the year. The market remains competitive but we are making good progress as we defend and drive our profitability in Wholesale by targeting a growing share of government business as well as other growth sectors within the private sector. We continue to pursue our strategic objective of growing our market share in Retail by offering multi-channel market leading products and services at competitive rates whilst also offering an increasingly sophisticated service for our high net worth retail customers."

Subsidiary in Turkey

Alternatifbank ("ABank") delivered a 29% increase in net profit to TL 63 million for the half year ended 30 June 2014 (TL 48 million for the same period in 2013).

Operating income grew by TL 16 million to TL 261 million in the first half of 2014, from TL 245 million in the half year ended 30 June 2013, due mainly to an increase in net fees and commission income. As at 30 June 2014, ABank had grown its customer lending by 35% to TL 7.6 billion and customers' deposits increased by 27% to TL 5.3 billion compared with the same period in 2013.

Associates in the UAE and Oman

National Bank of Oman and United Arab Bank have achieved a strong financial performance for the first half of 2014 with a 32.2% improvement in profitability as compared to the same period in 2013.

National Bank of Oman

National Bank of Oman ("NBO") achieved a net profit of OMR 23 million for the half year ended 30 June 2014 as compared to OMR 18.8 million, an increase of 22.8% over the same period in 2013. Operating income grew by OMR 3.5 million to OMR 54.1 million, from OMR 50.6 million in the half year ended 30 June 2013, mainly due to an increase in net interest income which was up 5% to OMR 37.9 million. As at 30 June 2014, NBO grew its customer lending by 7.1% to OMR 2.2 billion and customers' deposits increased by 33.6% to OMR 2.8 billion compared with the same period in 2013.

United Arab Bank

United Arab Bank ("UAB") delivered a net profit of AED 328.3 million for the half year ended 30 June 2014 which represents an increase of 26.2% over the same period in 2013. The total operating income for the half year ended 30 June 2014 increased by 41.4% to AED 676 million, from AED 478 million for the same period in 2013 with robust underlying performance from both Net Interest Income and Non-Interest Income, up 39.8% and 46.1% respectively against the same period in 2013. UAB's loans and advances increased by 34.8% to AED 17.9 billion as at 30 June 2014, with customers' deposits at AED 18.6 billion, up 49.5% compared to the same period in 2013.

- END -

For more information please contact:

Mona Abdallah Jon Earl

Head of Corporate Communications Managing Director

Commercial Bank F T I Consulting

Tel: +974 4449 0169 Tel: +971 (0) 50 494 1178

Email: m.abdallah@cbq.qa Email: jon.earl@fticonsulting.com

Notes to Editors

About Commercial Bank

Commercial Bank has total assets of QAR 112 billion as at 30 June 2014. As a full service commercial bank, the Bank offers a full range of corporate, retail and investment banking services as well as owning and operating exclusive Diners Club franchises in Qatar and Oman. The Bank's countrywide network includes 34 full service branches and 150 ATMs.

Profitable every year since incorporation in 1974, continual investment in technology and human capital, together with a strong capital base, provides a solid foundation for continued growth. A successful diversification strategy has expanded Commercial Bank's GCC footprint through strategic partnerships with associated banks, the National Bank of Oman (NBO) in Oman and United Arab Bank (UAB) in the UAE. NBO, the second largest bank in Oman with total assets of OMR 3.5 billion as at 30 June 2014, has 62 branches in Oman and 1 branch each in Egypt, Abu Dhabi and Dubai. UAB is headquartered in Sharjah, with total assets of AED 25.1 billion as at 30 June 2014, and operates 27 branches across the emirates in the UAE. Building on the successful execution of the Bank's expansion strategy to date, Commercial Bank completed the acquisition of a majority stake in Alternatifbank in Turkey in July 2013.

Commercial Bank enjoys strong credit ratings of (A) from Fitch, (A1) from Moody's and (A-) from Standard & Poor's. The Bank is listed on the Qatar Exchange and was the first Qatari bank to list its Global Depository Receipts (GDRs) as well as bonds on the London Stock Exchange. Additionally, Commercial Bank's Swiss Franc bond issuance in December 2010, listed on the SIX Swiss Exchange, was the first public bond issuance by a Qatari bank in Switzerland.

The Bank is dedicated to supporting Qatar's community and social infrastructure through Corporate Social Responsibility programmes and sponsorship of various events. Title sponsorship of the Commercial Bank Qatar Masters and the Grand Prix of Qatar Moto GP reflects the Bank's promotion of excellence in sports and its keen interest in enhancing Qatar's international sporting reputation. To reinforce Qatar's flourishing cultural environment, Commercial Bank is the strategic partner of the Katara Cultural Village. This collaboration symbolises the Bank's commitment to supporting cultural activities in Qatar and making the country a regional arts and cultural hub.

www.cbq.qa

About Alternatifbank (ABank)

ABank was established in 1991 and has been listed on the Istanbul Stock Exchange since 1995. Commercial Bank became the majority shareholder in ABank in 2013 holding a 74.24% stake, following the acquisition of ABank shares of 70.84% from the Anadolu Group and 3.40% through a public tender offer. Anadolu Group remains a significant shareholder retaining 25% of shares in ABank.

ABank is a mid-size Turkish bank that predominately serves medium-sized companies through a country-wide network of 73 branches in 27 cities (as of 30 June 2014). ABank provides commercial/corporate banking services and products, with a special focus on the growing segment of Small and Medium-Sized Enterprises. The Bank's main product ranges cover trade finance instruments, working capital finance, cash management, and portfolio management. The Bank has also recently made a strategic decision to re-enter Retail Banking, targeting the "mass affluent segment" in terms of customer profile with tailor made products.

At 30 June 2014, ABank had total assets of TL 11.3 billion, total loans stood at TL 7.6 billion, customer deposits of TL 5.3 billion and shareholders' equity of TL 881 million.

http://wwweng.abank.com.tr

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