C Bk Qatar S Regulatory News (CBQS)

19 Oct 2009 07:42



For immediate release 

Commercial Bank of Qatar

Financial Results for the nine months ended 30 September 2009

Stable earnings with net operating income up 2% to QR 2.2 billion

Sunday 18 October 2009, Doha, Qatar: Commercialbank ("the Bank"), the largest private sector bank in Qatar, announces its financial results for the nine months ended 30 September 2009. The Bank delivered stable earnings performance in the first nine months of 2009 with net profit at QR 1.34 billion.

Key financial highlights 

Net operating income up 2% to QR 2,181 million

Net interest income up 35% to QR 1,190 million

Net profit at QR 1,338 million

Earnings per share of QR 6.23

Customer loans and advances at QR 31.5 billion

Customers deposits at QR 30.6 billion

Shareholders' equity increased to QR 10.9 billion

His Excellency, Abdulla Bin Khalifa Al Attiyah, Chairman of the Board of Directors of the Bank said, "Over the course of the last nine months, Commercialbank has succeeded in delivering stable earnings for our shareholders. We are confident about the improving growth prospects of the Qatari market and remain optimistic about near term prospects, as the local and regional economies show signs of improvement. We are grateful to the Government of Qatar and the Qatar Central Bank for their continued support of the banking sector."

  

Financial Performance

Mr. Hussein Alfardan, Commercialbank's Managing Director added, "Our results for the nine months reflect the pragmatic and prudent approach we have taken in managing the business through the effects of the global financial crisis. The Bank is committed to a clear strategy of controlled and sustainable growth, whilst remaining vigilant to the changing economic environment. We continue to focus on creating sustainable shareholder value by broadening and strengthening our long term relationships with our customers."

 

Net operating income for the nine months ended 30 September 2009 was up 2% to QR 2.18 billion. The Bank has continued to be proactive in the management of its balance sheet by improving yields on certain asset classes and by diversifying its funding sources through a reduction in the level of high cost deposits. These actions led to an increase in net interest income to QR 1.19 billion from QR 0.9 billion in the nine month period to 30 September 2008. As a result, net interest margin continued its improvement to 3.31% from 3.24% reported at 30 June 2009 and from 3.04% at 30 September 2008 and was achieved despite reducing the cost of borrowing to the Bank's corporate customers for a second time within three months. The increase in net interest income was, however, largely offset by lower fee income from borrowing and lower investment gains reflecting a reduction in credit demand from the private sector in Qatar and reduced asset valuations.

 

Loans and advances to customers were QR 31.5 billion, 2% lower than the QR 32.1 billion reported at 30 September 2008. New lending was QR 1.8 billion during the three months ended 30 September 2009, this was offset, however, by repayments, including some early settlements, of QR 3.3 billion.  The new lending activity helped generate an 11% increase in fee and commission income in the third quarter compared with the second quarter of 2009. The lower level of loans and advances also reflects the sale of loans amounting to QR 3,043 million to the Government of Qatar in the second quarter of 2009. 

 

 

General and administrative expenses increased by 8% to QR 484 million compared with QR 447 million in the first nine months of 2008. The rise in expenses was predominantly due to the investment in personnel by the Bank in 2008 to grow its business. The tight management of costs saw general and administrative expenses cut by 4% in the third quarter of 2009 from the second quarter. Depreciation increased by QR 18 million to QR 76 million principally as a result of the expansion of the Bank's branch network and the establishment of the Bank's new head office. The cost to income ratio increased marginally to 24.4% from 22.0% in the same period last year but has reduced from 27.7% in the second quarter to 25.8%.

 

The Bank's net provisions increased to QR 397 million compared with QR 230 million in the first nine months of 2008. The increase in provisions was, mainly, a consequence of factors arising from the global financial crisis including the widespread reduction in international equity values which has resulted in an impairment loss of QR 108 million against the Bank's investment portfolio. In addition, the Bank has taken impairment provisions of QR 289 million against loans and advances to customers. These impairments consist of net provisions of QR 138 million against the retail lending portfolio (net retail provisions declined in the third quarter by 22% compared with the second quarter), the write-off in the second quarter of QR 97 million on the sale of loans and advances and other exposures from the corporate book to the Government of Qatar and a provision of QR 50 million in the third quarter of 2009, against a single corporate default. 

 

The net profit for the nine months ended 30 September 2009 was QR 1.34 billion compared with QR 1.56 billion in the same period for 2008. Net profit increased by 18% to QR 394 million for the three months to 30 September 2009 compared with QR 333 million in the second quarter of 2009. 

 

Total assets stood at QR 56.4 billion as at 30 September 2009 compared with QR 57.8 billion in 2008. The lower level of total assets reflects a decrease of QR 0.6 billion in customer lending and a reduction of QR 7.5 billion in interbank placements, partially offset by an increase of QR 3.9 billion in financial investments related to Qatari Government bonds and certificate of deposits. Customer deposits increased by 3% to QR 30.6 billion from QR 29.9 billion at the end of the same period in 2008 reflecting a focused drive to raise low cost deposits from the branch network.

 

The Bank's capital adequacy ratio was 16.5% at 30 September 2009 compared with 15.7% as at 30 September 2008. With market conditions starting to improve, the Bank's capital position will continue to be carefully managed and will be maintained above the Qatar Central Bank's minimum required level of 10%.

 

The Qatar Investment Authority (QIA) completed the first stage of its subscription process in January by investing QR 807 million in the Bank which represented 5% of the Bank's share capital. The second stage of the QIA subscription is expected to take place in December 2009 at the same rate of 5%.

 

Andrew Stevens, Commercialbank's Group Chief Executive Officer, commented, "Commercialbank has continued to be profitable growing its net operating income despite challenging market conditions. We have improved our net interest margin through proactive management of the balance sheet by reducing funding costs and focusing on improvement in the yields on our assets. 

 

The Bank's conservative approach to lending coupled with the cyclical slowdown of credit demand in the economy has resulted in a moderate reduction in our loan portfolio during the year and in lower fee income. The impact of the global financial crisis has necessitated further impairment provisions on both our international investment portfolio and against our lending book. 

 

We have been reviewing the Bank's organization to ensure that we have taken appropriate action to position the business to take advantage of the improvements in both local and regional economies whilst, at the same time, managing our capital position and reducing the costs of our operation .

 

We are beginning to see the first signs of improvement in our business segments and are optimistic going forward." 

  

Associates

The Bank's associates continued to make a solid contribution to the Bank's overall performance, albeit at a reduced level, and remain a key area of the Bank's diversification strategy. National Bank of Oman (NBO) and United Arab Bank (UAB), contributed QR 113 million in the nine months to 30 September 2009 compared with QR 155 million for the same period in 2008.

National Bank of Oman

NBO has delivered a solid earnings performance in the nine months to 30 September 2009 with net profit at RO 19.6 million. 

 

Proactive balance sheet management resulted in an increase in net interest income of 22% to RO 42.4 million and an improvement in net interest spreads to 3.18% from 3.09% for the nine months ended 30 September 2008. Loans and advances to customers grew to RO 1.38 billion, up by 12% compared with RO 1.23 billion at 30 September 2008. 

 

Operating expenses continued to be tightly managed and increased by only 5% to RO 25.8 million despite NBO opening 9 new branches and 23 new ATMs in the current year. The cost income ratio increased marginally to 42% from 40% in 2008. 

 

The credit quality of NBO's corporate and retail portfolios remained stable with non-performing loans amounting to RO 70 million, 100% covered by provisions. NBO's net provisions for credit losses and investments were RO 12.8 million in 2009 compared with a net recovery of RO 2.6 million in the nine months ended 30 September 2008. The increase in provisions is largely as a result of factors relating to the global financial crisis and consists of an impairment loss against the investment portfolio of RO 3.1 million, a higher gross provision against the lending portfolio of RO 10.4 million and a provision against specific interbank exposures of RO 4.0 million. 

NBO is making good progress in realigning its business strategies, risk management processes and customer value proposition as part of Commercialbank's collaborative strategy.

  

United Arab Bank

UAB has maintained its earnings momentum and recorded net profit growth of 12% to AED 204 million for the nine months ended 30 September 2009 compared with AED 182 million achieved during the same period last year. Net operating income was AED 350 million for the nine months ended 30 September 2009 compared with AED 307 million due, primarily, to a strong focus on balance sheet management and a prudent approach to new lending. 

UAB has maintained steady and solid growth in its operations and financial performance during 2009. UAB intends to maintain this conservative approach and has plans to expand its business in niche retail segments, namely Islamic financing services and wealth management, by leveraging its strong relationship with Commercialbank.   

For more information please contact: Parvez Khan AGM & Head of Investor Relations Commercialbank Tel: +974 449 1020 Email: parvezkhan@cbq.com.qa  Abdulla Al-Mosallam Manager, Investor Relations Commercialbank Tel: +974 420 2626 Email: abdulla.almosallam@cbq.com.qa

Hugh Barker/Jon Earl Financial Dynamics Tel: +971 502487620 / +973 39300851 Email: hugh.barker@fd.com  jon.earl@fd.com

Notes to Editors

About Commercialbank

Commercialbank is the leading private sector and second largest commercial bank in Qatar, by shareholder equity and total assets which were QR 56 billion at 30 September 2009. As a full service commercial bank, the Bank offers a complete range of corporate, retail, Islamic, and investment banking services as well as owning and operating exclusive Diners Club franchises in Qatar, Oman and Egypt. The Bank's country wide network includes 29 full service branches, including 6 Al Safa Islamic branches and 136 ATMs.

Profitable in every year since incorporation in 1975, proactive investments in technology and human capital, together with a strong capital base and underwriting capability, provide a solid foundation for continued growth. A successful diversification strategy has expanded Commercialbank's GCC footprint through strategic partnerships with its associated banks, 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 RO 1.8 billion as at 30 September 2009, has 68 branches in Oman, 5 branches in Egypt and 1 in Abu Dhabi. UAB is headquartered in Sharjah, with total assets of AED 6.6 billion as at 30 September 2009 and operates 9 branches in the UAE.

Commercialbank has prime single 'A' credit ratings from the three globally recognized rating agencies: Moodys, Fitch and S&P. The Bank is listed on the Qatar Exchange and was the first Qatari bank to list its Global Depository Receipts (GDRs) as well as its bonds on the London Stock Exchange. 

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