Last checked at 2 Feb 2009 07:00
For immediate release
Commercial Bank of Qatar Announces 2008 Full Year Results
Record net profit achieved for the year
Robust earnings performance driven by strength of all businesses
Sunday 1 February 2009, Doha, Qatar: Commercialbank of Qatar, the largest private sector bank in Qatar, today announced its full results for the year ended 31 December 2008.
Profit & Loss highlights - Full Year 2008
Operating income up 42.5% from QR 1.9 billion to QR 2.8 billion
Net profit increased by 22.4% to QR 1.7 billion
Earnings per share of QR 8.76 up from QR 7.63 in 2007
Dividend proposed of QR 7 per share
Balance sheet highlights - At 31 December 2008
Total assets increased by 35.0% to QR 61.3 billion
Customer loans grew by 35.5% to QR 33.9 billion
Customers' deposits were up 24.9% to QR 32.2 billion
Shareholders' equity rose by QR 3.8 billion to QR 10.0 billion
His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercialbank said: "Despite challenging conditions, the overall strength of our core earnings continued to enable us to generate sustainable dividends for shareholders. The banking sector remains strategically important and integral to the economic development and diversification of Qatar and Commercialbank is committed to remaining at the heart of that development. The bank's strong domestic franchise coupled with the underlying strength of the Qatar economy indicates continuing growth in the years ahead."
Financial Performance
Mr. Hussein Alfardan, Commercialbank's Managing Director commented on the financial performance: "Commercialbank achieved a record level of profit in 2008, an achievement of which we are extremely proud considering the adverse economic climate, particularly in the fourth quarter. The strong underlying performance is testament to the strength of the Bank's core business and the benefits derived from the regional banking alliance. Our focus for the year ahead remains on actively managing risk, capital and liquidity and we expect the incremental business and cost synergies from the alliance to support growth and progress going forward."
Net operating income for the year increased to QR 2.8 billion, up 42.5% year on year driven predominantly by higher net interest income, up QR 341 million, and increased loan-related fee income of QR 943 million, QR 277 million higher, compared to 2007. The Net interest margin improved from 2.9% in 2007 to 3.0% in 2008. Sustained expansion in the private sector in Qatar and continuing credit demand resulted in a 35.5% year on year growth in loans and advances to QR 33.9 billion. Financing provided by Al Safa Islamic banking also increased to QR 2.4 billion, up 163%, from QR 0.9 billion in 2007.
The Loan portfolio continued to be well diversified and of good quality. Net provision for Loans and advances rose from QR 50 million in 2007 to QR 61 million in 2008. The cumulative provision for loans and advances was QR 287 million at the end of 2008 and represented 99% of non-performing loans (2007: 97%). Non-performing loans as a proportion of gross loans increased marginally from 0.83% to 0.85%.
Costs increased 38.8% to QR 750 million due to growth in the business, particularly in staff-related expenditure, legal and professional fees and inflationary pressures. The Bank also depreciated the new Cb Plaza building for nine months of the year. However, as growth in revenue continued to outpace the rise in costs, the cost to income ratio was reduced to 25.2% from 26.0% in 2007. Cost synergies and cost control is one of the main priorities for 2009.
The Bank achieved a record net profit of QR 1.7 billion, an increase of 22.4% compared to the year ended 31 December 2007. Net profit was, however, impacted by the global financial crisis and the need to take provision for impairment on the investment portfolio of QR 465 million (2007: QR 86 million) in line with International Accounting Standards. Earnings per share grew to QR 8.76 for the full year compared to QR 7.63 in 2007.
Total assets at the end of the period stood at QR 61.3 billion, an increase of 35% compared to the end of 2007, due to growth in lending as well as an increase of QR 5.3 billion to QR 14.3 billion in amount due from banks that was reflected in the high level of liquidity held by the Bank during the last quarter of the year.
Customers' deposits reached QR 32.2 billion, a 24.9% increase from the end of 2007. The higher level was due, mainly, to Time deposits raised from the Government and Retail sectors.
Net Profit for the fourth quarter of 2008 was QR 140 million, 63% lower than the comparative period in 2007, with the results being impacted by the effects of the global financial crisis. The Bank provided QR 262 million for impairment against its investment portfolio in the fourth quarter which reflected the impact of the downturn in stock markets. At the same time operating revenue derived from the investment portfolio decreased by QR 75 million.
In difficult market conditions, the Bank took appropriate measures to strengthen liquidity and tighten lending criteria. While continuing to maintain a strong financial profile, the Bank will monitor liquidity, funding and risk areas closely going forward.
Capital Base
During 2008, the Bank's capital base was strengthened by QR 3.8 billion, following the successful issue of 24 million new ordinary shares. The capital raising was accomplished as a three part process via a Rights Offering in June, a Global Depositary Receipt (GDR) Offering and a Private Placement of New Ordinary Shares in July. As at 31 December 2008 Total Shareholders' Equity amounted to QR 10.0 billion. However due to the larger capital base, the Return on Average Equity declined to 21.0% from 23.5% in 2007.
On 13 October the government announced that the Qatar Investment Authority ('QIA') would be providing additional capital of up to 20% for all Qatari banks listed on the Doha Securities Market, demonstrating the support of the government authorities for the banking system in Qatar by further strengthening the capital ratios of individual banks. On 26 November, the Bank's shareholders approved a 20% increase in its share capital which will enable the Bank to issue up to 41 million new ordinary shares at the closing price on the Doha Securities Market on 12 October 2008 of QR 78.30.
On 21 January 2009, the QIA completed the first stage of the subscription process in the Bank's share capital by investing QR 807 million which represented 5% of the Bank's share capital. It is planned that the second stage be subscribed during December 2009 at a rate of 5%.
The Bank's capital adequacy ratio at 31 December 2008 was 15.66% (the ratio rises to 16.93% on a proforma basis with the inclusion of the QIA's subscription), compared to 11.85% at the end of 2007 and comfortably exceeds the Basel II requirements.
Dividend
The Board has recommended distribution of a cash dividend of QR 7 per share for the year 2008 (70% of the Bank's paid-up share capital).
Business Performance
Andrew Stevens, Commercialbank's Group Chief Executive Officer commented: "Overall the Bank has achieved record levels of earnings in 2008, against a turbulent global market backdrop, driven by sustainable growth in our core businesses. Our affiliate banks in Oman and UAE have also achieved strong performance levels despite the difficult conditions.
"The results reflect an increase in provisions against local and regional investments, reflecting market conditions, and in line with our prudent approach we have taken a charge of QR 465 million for the year. Our continued focus on sustainable revenue growth, capital strength, cost discipline and risk management will ensure the bank is strongly positioned to face the challenges that lie ahead."
Corporate Banking
Net Operating Income increased from QR 1.3 billion in 2007 to QR 2.0 billion, an increase of 49.4%. Corporate banking had another successful year and was the major contributor to the Bank's overall growth and profit. This was achieved by following a strategy to grow the business' lending selectively, with attention to asset quality and profitability.
Loans and advances grew by 31% to QR 25.9 billion, whilst deposits were up 15.8% to QR 22.1 billion at the end of 2008. Looking forward, the business aims to continue growing its assets selectively and profitably under strict risk criteria.
Retail Banking
Net Operating Income increased from QR 0.5 billion to QR 0.7 billion, an increase of 24.7%. Retail banking increased its footprint by opening two new branches and installing 19 ATMs. Innovative product offerings introduced to meet the evolving needs of our customers included a new e-savings Plus product which together with the existing e-savings account attracted over QR I billion in balances during 2008.
Loans and advances grew by 27% to QR 5.5 billion, whilst deposits were up 37% to QR 7.3 billion at the end of 2008. Lending to retail customers will continue to be a core focus of the business in 2009 albeit under tighter risk management.
Al Safa Islamic Banking
Al Safa Islamic Banking has continued to perform well with net profit climbing from QR 40 million at the end of 2007 to QR 71 million at 31 December 2008, a 78% increase. Customers' deposits grew to QR 3.3 billion from QR 1.4 billion for the prior year, and total Islamic assets reached QR 4.1 billion compared with QR 1.7 billion at the end of 2007. During 2008 we expanded the Al Safa activities in both retail and corporate sectors, including opening a new dedicated branch and increasing the number of ATMs.
Affiliates
Commercialbank's affiliates - National Bank of Oman (NBO) and United Arab Bank (UAB), have recorded strong growth and profitability, contributing QR 208 million representing 12 % of Commercialbank's net profit in 2008. In line with the Group's collaborative strategy, implemented across its affiliates, NBO and UAB continued to make significant progress in aligning business strategies, systems and risk management practices.
Outlook
We remain focused on strengthening all of our core businesses, developing synergies through the banks' alliance while sustaining liquidity and capital strength. The Bank is well positioned in the market and supported by the solid macroeconomic backdrop in Qatar. Our resolve to growing our business, seizing new opportunities that may arise, and delivering long-term value to shareholders, has never been stronger.
END -
| For more information please contact: Roy Leask Head of Group Corporate Communications Commercialbank Tel: +974 449 1090 Email: roy.leask@cbgroup.com.qa Nicholas Coleman Group Chief Financial Officer Tel: +974 449 1140 Email: nick.coleman@cbgroup.com.qa | Heidi Robinson Capital MS&L Tel: +971 50 458 5022 Email: heidi.robinson@capitalmsl.com Kate Delahunty Capital MS&L Tel: +971 4 427 6446 Email: kate.delahunty@capitalmsl.com |
Notes to Editors
About Commercialbank:
Commercialbank is the leading private sector and second largest commercial bank in Qatar, by total assets and shareholders' equity. Cb is a full service commercial bank and offers a complete range of corporate banking, investment banking, Islamic banking, trade finance and retail banking. Commercialbank also owns and operates exclusive Diners Club franchises in Qatar, Oman and Egypt. The bank's country wide network includes 27 full service branches, including 6 Al Safa Islamic branches, and 135 ATMs.
Commercialbank has achieved a compounded annual growth rate of over 40% in all key measures over the last five years, with the well diversified asset base rising to QR 61.3 billion as at 31 December 2008. Cb has a presence in Oman and the UAE through its affiliates, National Bank of Oman and United Arab Bank. NBO is the second largest bank in Oman with total assets of RO 1.8 billion as at 30 September 2008 and has 52 branches in Oman, 5 branches in Egypt and 1 in Abu Dhabi. UAB is headquartered in Sharjah, with total assets of AED 7.1 billion as at 30 September 2008 and operates 9 branches in the UAE.
Commercialbank now ranks among the top 20 Arab banks by capital strength, and is one of the fastest growing banks in the GCC region. Cb has prime single A credit ratings from all the three globally recognized rating agencies - Moodys, Fitch and S&P. Cb is listed on the Doha Securities Market (ticker: CBQK) and is the first Qatari bank to list its Global Depository Receipts (GDRs) as well as its bonds on the London Stock Exchange (tickers: CBQS & CBQA)
Commercialbank was ranked number one Qatari company, in a corporate governance index of GCC companies in the 2008 Hawkamah Institute for Corporate Governance/TNI BASICs Research. CBQ and National Bank of Oman, both members of the Commercial Bank alliance were placed in the top ten Gulf companies, securing joint eighth position amongst the 580 Gulf organisations studied.
| The Commercial Bank of Qatar (Q. S. C.) | |||||
| Consolidated Statement of Income | |||||
| The year ended 31 December 2008 | |||||
| Figures in thousand Qatar Riyals | |||||
| 2008 | 2007 | ||||
| Interest income | 2,692,416 | 2,244,106 | |||
| Interest expense | (1,474,808) | (1,368,079) | |||
| Net interest income | 1,217,608 | 876,027 | |||
| Income from Islamic financing and investment activities | 180,896 | 83,664 | |||
| Less unrestricted investment deposit owners' share of profit | (106,413) | (30,625) | |||
| Net income from Islamic financing and investment activities | 74,483 | 53,039 | |||
| Fee and commission income | 1,040,015 | 733,275 | |||
| Fee and commission expense | (96,564) | (67,058) | |||
| Net fee and commission income | 943,451 | 666,217 | |||
| Dividend income | 39,108 | 38,943 | |||
| Net gain from dealing in foreign currencies | 130,925 | 83,754 | |||
| Net gain from financial investments | 276,030 | 205,772 | |||
| Other operating income | 87,024 | 18,860 | |||
| 533,087 | 347,329 | ||||
| Net operating income | 2,768,629 | 1,942,612 | |||
| General and administrative expenses | (682,137) | (487,925) | |||
| Depreciation | (67,973) | (52,492) | |||
| Impairment losses on loans and advances to financial institutions, net | 2,466 | 2,240 | |||
| Impairment losses on loans and advances to customers, net | (61,278) | (50,274) | |||
| Impairment losses on available for sale investments | (464,850) | (85,904) | |||
| Impairment losses on other assets | (11,034) | ||||
| Total operating expenses and provisions | (1,273,772) | (685,389) | |||
| Profit before share of result of associate | 1,494,857 | 1,257,223 | |||
| Share of results of associate net of tax (estimated)- | 207,585 | 133,492 | |||
| Net Profit for the year | 1,702,442 | 1,390,715 | |||
| Basic/Diluted earnings per share (QR) | 8.76 | 7.63 | |||
| The Commercial Bank of Qatar Q S C | |||||||
| Consolidated Balance Sheet | |||||||
| As at 31 December 2008 | |||||||
| Figures in thousand Qatar Riyals | |||||||
| 2008 | 2007 | ||||||
| ASSETS | |||||||
| Cash and balances with Central Bank | 3,015,283 | 2,248,858 | |||||
| Due from banks and financial institutions | 14,315,648 | 9,019,483 | |||||
| Loans, advances and financing activities for customers | 33,897,513 | 25,021,487 | |||||
| Financial investments | 4,774,963 | 4,664,672 | |||||
| Investment in associates | 3,641,486 | 3,329,900 | |||||
| Property and equipment | 1,136,073 | 721,393 | |||||
| Other assets | 520,785 | 391,486 | |||||
| Total assets | 61,301,751 | 45,397,279 | |||||
| LIABILITIES | |||||||
| Due to banks and financial institutions | 10,922,869 | 4,907,743 | |||||
| Customers' deposits | 29,337,943 | 24,656,692 | |||||
| Borrowing under repurchase agreement | 781,226 | - | |||||
| Other borrowed funds | 6,096,091 | 7,623,105 | |||||
| Other liabilities | 1,337,246 | 872,900 | |||||
| Total liabilities | 48,475,375 | 38,060,440 | |||||
| Unrestricted Investment accounts | 2,847,931 | 1,109,022 | |||||
| Investment deposits owners equity | 2,847,931 |
| 1,109,022 | ||||
| Total liabilities and unrestricted investment accounts | 51,323,306 |
| 39,169,462 | ||||
| EQUITY | |||||||
| Paid up capital | 2,062,053 | 1,401,579 | |||||
| Legal reserve | 5,923,731 | 2,915,602 | |||||
| General reserves | 26,500 | 26,500 | |||||
| Cumulative changes in fair value reserve | (442,857) | 188,426 | |||||
| Risk reserves | 638,300 | 346,300 | |||||
| Other reserves | 325,933 | 171,903 | |||||
| Proposed dividend | 1,443,437 | 560,632 | |||||
| Proposed bonus shares | - | 420,474 | |||||
| Retained earnings | 1,348 | 196,401 | |||||
| Total equity | 9,978,445 |
| 6,227,817 | ||||
| Total liabilities and equity | 61,301,751 |
| 45,397,279 | ||||
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