C Bk Qatar S Regulatory News (CBQS)

The Commercial Bank (P.S.Q.C.) Announces

Financial Results for the Nine Months Ended 30 September 2017

17 October 2017, Doha, Qatar: The Commercial Bank (P.S.Q.C.) ("the Bank"), its subsidiaries and associates ("Group") announced today its financial results for the nine months ended 30 September 2017. The Group reported a net profit of QAR 259 million as compared to QAR 491 million for the same period in 2016, a decrease of 47.3%.

Key financial highlights for the Group compared to the same period in 2016:

· Total assets of QAR 134 billion, up by 8.1%

· Customer loans and advances of QAR 84.5 billion, up by 11.2%

· Customer deposits of QAR 73.3 billion, up by 9.8%

· Net operating income of QAR 2,654 million, down by 2.4%

· Operating profit of QAR 1,641.8 million, up by 9.6%

· Cost income ratio of 38.1% reduced from 45.2%

· Provisions on non-performing loans at QAR 1,450.8 million, up by 31%

· Net profit of QAR 259 million, down by 47.3%

· Earnings per share of QAR 0.65

His Excellency Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, "Despite the ongoing situation in the region, Qatar's financial system remains robust, with Qatar remaining an AA- rated country by Fitch. Within this, Commercial Bank continues to see positive progress as seen by the growth in our underlying business and strong liquidity. Commercial Bank has continued to support and strengthen Qatar's investment and trade flows through its subsidiary ABank in Turkey and its associate NBO in Oman".

Mr. Hussain Al Fardan, Commercial Bank's Vice Chairman, added, "Commercial Bank has continued to show solid progress in delivering on its strategy. The core underlying business saw quarterly operating profits increasing by 9.6% over the same period last year, our third quarter in a row of increased profitability at the operating level. In parallel, we have continued to provision for our legacy loan book, our funding remains robust and our long term credit is rated between A+ and BBB+ by the three main agencies."

Net operating income for the Group decreased by 2.4% to QAR 2,654 million for the nine months ended 30 September 2017, down from QAR 2,720.5 million achieved in the same period in 2016.

Net interest income for the Group increased by 1.9% to QAR 1,835.5 million for the nine months ended 30 September 2017 compared to QAR 1,800.8 million achieved in the same period in 2016, due to an increase in the interest income as a result of higher interest rates as compared to last year. Net interest margin remains stable at 2.2% compared to Q2 2017.

Non-interest income for the Group decreased by 11% to QAR 818.5 million for the nine months ended 30 September 2017 compared with QAR 919.7 million for the same period last year. The overall decrease in non-interest income was due to lower income from investment securities.

Total operating expenses were tightly managed at a Group level, down 17.2% to QAR 1,012.2 million for the nine months ended 30 September 2017 compared with QAR 1,222.4 million for the same period in 2016. Costs reductions were primarily driven by lower staff and administrative expenses.

The Group's net provisions for loans and advances increased by 31% to QAR 1,450.8 million for the nine months ended 30 September 2017, from QAR 1,107.8 million for the same period in 2016. The non-performing loan (NPL) ratio increased to 5.6% in the nine months ended September 2017 compared to 5.3% for the same period in 2016. However, loan coverage ratio increased to 91.6% in the nine months ended September 2017 compared to 78.8% for the same period in 2016.

The Group delivered balance sheet growth of 8.1% for the nine months ended 30 September 2017 with total assets at QAR 134 billion, compared to QAR 123.9 billion for the same period in 2016. Total asset growth was driven mainly by an increase of QAR 8.5 billion in loans and advances and QAR 3.1 billion in investment securities.

Group's loans and advances to customers increased by 11.2% to QAR 84.5 billion for the nine months ended 30 September 2017 compared with QAR 76 billion for the same period in 2016. The growth in lending has been generated, mainly from the government & semi-government and services sectors.

Group's investment securities increased by 19.1% to QAR 19.3 billion for the nine months ended 30 September 2017 compared with QAR 16.2 billion for the same period last year. The increase is mainly in Government bonds.

Group's customer deposits increased by 9.8% to QAR 73.3 billion for the nine months ended 30 September 2017, compared with QAR 66.7 billion for the same period last year.

Mr. Joseph Abraham, Commercial Bank's Group Chief Executive Officer, commented, "We continued to execute strongly on the Strategic Reshape plan which we announced 12 months ago. Our balance sheet is strong with 11.2% growth in loans, ahead of the market growth of 7% and in line with our targeted sectors. In deposits we saw growth of 9.8% with liquidity continuing to be well managed."

"For the third quarter in a row our costs are down, with costs falling 17.2% compared to the same period last year, reducing our cost to income ratio from 45.2% in the same period last year to 38.1%."

"We continue to provide for our legacy loan book and will do so for the remainder of 2017 before normalising the cost of risk in 2018".

"ABank recently announced changes to its Chief Executive Officer and Board of Directors, which is an important step in the reshape of that business and will help take it to the next level"

 "For our Associates, NBO reported a profit of QAR 113.9 million, while UAB delivered a loss of QAR 1.3 million. We have also announced, that discussions have commenced regarding the potential sale of our stake in the United Arab Bank, which if and when concluded will allow us to reallocate capital in line with our strategic plan."

Subsidiary in Turkey

Alternatifbank ("ABank") delivered a net profit of TL 57 million (QAR 57.7 million) for the nine months ended 30 September 2017 (TL 26.8 million loss for the same period in 2016).

Net operating income increased by 15.2% to TL 390.5 million (QAR 395.2 million) for the nine months ended 30 September 2017, from TL 339.1 million (QAR 421 million in 2016), due to increase in net interest income and net fee and commission income. As at 30 September 2017, ABank had increased its customer lending by 28.3% to TL 13 billion (QAR 13.3 billion) from TL 10.1 billion (QAR 12.3 billion) in September 2016. Customers' deposits increased by 28% to TL 8.8 billion (QAR 9 billion) during the nine months ended September 2017 , compared to TL 6.9 billion (QAR 8.4 billion) during the same period last year.

Associates

National Bank of Oman

National Bank of Oman ("NBO") net profit decreased by 18% to OMR 34.5 million (QAR 326.4 million) for the nine months ended 30 September 2017 as compared to OMR 42.1 million (QAR 398.1 million) in the same period in 2016. Net operating income decreased by OMR 3.7 million (QAR 35.4 million) to OMR 98.5 million (QAR 931.3 million), from OMR 102.3 million (QAR 966.7 million) in the same period in 2016. Provisions for loans and advances increased to OMR 12.6 million (QAR 119.1 million) from OMR 9.3 million ( QAR 87.9 million) in the same period last year. As at 30 September 2017, NBO maintained its customer lending at OMR 2.7 billion (QAR 25.4 billion) and customers' deposits increased by 2.9% to OMR 2.5 billion (QAR 23.5 billion) compared to the same period last year.

United Arab Bank

United Arab Bank ("UAB") net profit decreased by 43.3% to AED 49.7 million (QAR 49.2 million) for the nine months ended 30 September 2017 over the same period in 2016. The operating income for the nine months ended 30 September 2017 decreased by 12.9% to AED 305.6 million (QAR 302.8 million), from AED 350.7 million (QAR 347.5 million) in 2016. Net Interest Income decreased by 24.2% and non-Interest Income decreased by 26.8%, as compared to the same period in 2016. UAB's loans and advances decreased by 7.4% to AED 12.9 billion (QAR 12.7 billion) as at 30 September 2017, while customers' deposits decreased by 1.5% to AED 14.3billion (QAR 14.2 billion) compared to the same period last year.

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