C Bk Qatar S Regulatory News (CBQS)

The Commercial Bank (Q.S.C.)

Financial Results for the Nine Months Ended 30 September 2016

 Net profit of QAR 491 million for the nine months ended 30 September 2016

18 Oct 2016, Doha, Qatar: The Commercial Bank Q.S.C. ("Commercial Bank" or "the Bank"), its subsidiaries and associates announced today its financial results for the nine month period ended 30 September 2016. The Bank reported a net profit of QAR 491 million as compared to QAR 1,341 million for the same period in 2015, a decrease of 63%.

Key financial highlights compared to the same period in 2015

· Net operating income down 11% to QAR 2,733 million

· Net profit of QAR 491 million

· Total assets up 4% to QAR 123.9 billion

· Customer loans and advances up by 4% to QAR 76 billion

· Customers' deposits up 4% to QAR 66.7 billion

· Earnings per share of QAR 1.04

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, "Commercial Bank has proudly served the financial needs of its customers for over 40 years by always looking forward to the future. I, together with my fellow Board members, are resolved to maintain the development of Commercial Bank. Through our new executive leadership, and under the guidance of the Board, we are taking necessary decisions now to reshape a strong Commercial Bank for the future. Commercial Bank continues to have great potential to generate long term value for our customers and investors. Our decisions now will ensure that we unlock the Bank's full potential."

Financial Performance

Mr. Hussain Al Fardan, Commercial Bank's Vice Chairman and Managing Director, added, "Commercial Bank reported an operating profit of QAR 1.4 billion for the nine months ended 30 September 2016. During this period, we aligned our local market strategies to the current challenging realities, pursuing only those opportunities which meet our returns criteria. Our discipline will be maintained as we continue to serve our customers."

Net operating income decreased by 11% to QAR 2,733 million for the nine months ended 30 September 2016, down from QAR 3,058 million achieved in the same period in 2015.

Net interest income was QAR 1,800 million for the nine months ended 30 September 2016, 5% lower than the same period of 2015, mainly due to an increase in cost of deposits. Net interest margin decreased to 2.3% as compared to 2.5% in the same period in 2015.

Non-interest income was down by 19% to QAR 933 million for the nine months ended 30 September 2016 compared with QAR 1,155 million. The overall decrease in non-interest income was due to lower net fee and commission income.

Total operating expenses were up by 2% at QAR 1,235 million for the nine months ended 30 September 2016 compared with QAR 1,256 million for the same period in 2015.

The Bank's net provisions for loans and advances were QAR 1,108 million for the nine months ended 30 September 2016, up 104% from QAR 544 million for the same period in 2015. The non-performing loan (NPL) ratio has increased to 5.3% at 30 September 2016 compared with 3.6% at the end of September 2015 and the coverage ratio was 78.8% as at 30 September 2016 compared to 81.3% as at 30 September 2015.

Impairment provisions on the Bank's investment portfolio increased to QAR 68 million for the nine months ended 30 September 2016 compared with QAR 25 million for the same period in 2015.

Commercial Bank delivered balance sheet growth of 4% at the end of September 2016 with total assets at QAR 123.9 billion, compared to QAR 119.2 billion at the end of September 2015. Total asset growth was driven mainly by an increase of QAR 2.6 billion in loans and advances and QAR 3.6 billion in due from banks and offset by lower investment in securities by QAR 2 billion.

Loans and advances to customers were up by 4% to QAR 75.9 billion at 30 September 2016 compared with QAR 73.4 billion at the end of September 2015. The growth in lending has been generated, mainly in Services and Commercial Sectors.

Investment securities was down 12% to QAR 16.2 billion as at 30 September 2016 compared with QAR 18.4 billion at the end of September 2015. The decrease is mainly in Treasury bills issued by the Central Bank.

Customers' deposits increased by 4% to QAR 66.7 billion at 30 September 2016, compared with QAR 64.1 billion as at 30 September 2015. The increase was mainly in time deposits.

Mr. Joseph Abraham, Commercial Bank's Chief Executive Officer, commented, "Since joining Commercial Bank in July, we are completing a review of the Bank's strategy, performance and future direction and we will update the market with the results of our review later this year. However, one clear action became evident early in the process, which was the need for us to recognise a number of non-performing loans. The decision we have taken to provide for an additional QAR 505 million of loans in the third quarter has consequently impacted our financials. Both the Board and the Bank's leadership team view this as the necessary first step in aligning the business for the current and future economic environment and ensuring Commercial Bank builds sustainable earnings and is well positioned for the future."

He added, "During the period, we continued to manage the business conservatively, reflecting both the challenges and opportunities of the current market. Qatar generated a solid financial performance excluding provisioning with QAR 431 million operating profit for the third quarter. Our Turkish subsidiary, ABank, has been aligned more closely in its working with Commercial Bank and with the injection of new equity and a Tier 2 issuance raised in the first half of the year, we had the funds to pursue loans in the corporate mid-market. However loan growth was limited as we remained highly selective of opportunities. Most importantly, we brought operational costs down by 5% at ABank during the period. UAB continues to successfully recover as its management team execute upon the realignment of the business to the UAE's corporate market, whilst NBO in Oman has performed well."

Subsidiary in Turkey

Alternatifbank ("ABank") delivered a net loss of TL 26.8 million for the nine months ended 30 Sep 2016 (TL 116 million profit for 2015).

Net operating income decreased by TL 133 million to TL 339 million for the nine monthes ended 30 Sep 2016, from TL 472 million in 2015, mainly due to a decrease in fees and commission income. As at 30 Sep 2016, ABank had decresed its customer lending to TL 10.1 billion from TL 10.7 billion in September 2015. Customers' deposits increased by 11% to TL 6.9 billion compared to TL 6.2 billion in September 2015.

Associates in the UAE and Oman

National Bank of Oman and United Arab Bank have achieved a profit of QAR 159 million for the nine months ended 30 September 2016 as compared to QAR 152 million in the same period in 2015.

- END -

For more information please contact:

Notes to Editors

About Commercial Bank

Commercial Bank has total assets of QAR 123.9 billion as at 30 Sep 2016. 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 31 full service branches and 175 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 Sep 2016, has 60 conventional branches and 6 Islamic branches in Oman and 1 branch each in Egypt, Abu Dhabi and Dubai. UAB is headquartered in Sharjah, with total assets of AED 22.5 billion as at 30 Sep 2016, and operates 22 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 (A2) from Moody's, (A+) from Fitch, and (BBB+) 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) on the London Stock Exchange. 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. Commercial Bank's latest bond issuance in June 2014 and June 2016 are listed on the Irish Stock Exchange.

Commercial Bank was awarded "SME Bank of the Year" for 2016 by The Asian Banker based on its wide-ranging achievements over the past three years, specialised team and customer focused products and services for SMEs. Commercial Bank also won the "Best Contact Centre" award at The Gulf Customer Experience Awards 2015 for outstanding customer service. In recognition of its CSR activities benefitting the Qatari community, Commercial Bank was awarded the "Best CSR Report", at the Corporate Social Responsibility awards ceremony for organisations in Qatar

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 reflects the Bank's promotion of excellence in sports and its keen interest in enhancing Qatar's international sporting reputation.

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. Currently the Bank owns 75% of ABank shares.

ABank is a mid-size Turkish bank that predominately serves medium-sized companies through a country-wide network of 53 branches in 20 cities. ABank provides commercial/corporate banking services and products, with a special focus on the growing segment of Small and Medium-Sized Enterprises. ABank's main product ranges cover trade finance instruments, working capital finance, cash management, and portfolio management.

At 30 Sep 2016, ABank had total assets of TL 14.9 billion, total loans stood at TL 10 billion, customer deposits of TL 6.9 billion and shareholders' equity of TL 1.1 billion.

http://wwweng.abank.com.tr