C Bk Qatar S Regulatory News (CBQS)

The Commercial Bank (Q.S.C.)

Financial Results for the Half Year Ended 30 June 2015

The Commercial Bank increases quarterly profit by 17% to QAR 589 million

14 July 2015, Doha, Qatar: The Commercial Bank Q.S.C. ("Commercial Bank" or "the Bank") and its subsidiaries and associates announced today its financial results for six months to 30 June 2015. The Bank delivered a net profit of QAR 589 million for the second quarter 2015 an increase of 17.3% compared to the second quarter 2014, and a 27% increase compared to the first quarter 2015. The Bank reported a net profit of QAR 1,052 million for the first half of 2015 as compared to QAR 1,051 million for the same period in 2014.

Key financial highlights compared to the same period in 2014

· Net operating income up 4% to QAR 2,075 million

· Net profit of QAR 1,052 million

· Total assets up 6% to QAR 119.1 billion

· Customer loans and advances up by 4.6% to QAR 72.6 billion

· Customers' deposits up 7% to QAR 64.1 billion

· Earnings per share of QAR 2.95

His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank said, "The Qatar economy continues to show strong growth momentum in 2015. Our non-oil sector continues to grow, stimulated by the construction, tourism and hospitality sectors and we see this continuing to grow with increased investment and spending by the Government. The Commercial Bank's performance over the first half of 2015 gives us confidence for our full year performance."

Financial Performance

Mr. Hussain Al Fardan, Commercial Bank's Vice Chairman and Managing Director added, "Commercial Bank has built a solid foundation during the first half of 2015 with the second quarter results showing good consistency despite the increasing levels of competition in our markets and the impact of the Turkish Lira on our reported results. Commercial Bank delivered a strong performance this quarter, supported by an increasingly strong economy and our Associates continued to play an important role, delivering a 18% increase in quarterly profit growth. This has enabled Commercial Bank to deliver a 27% increase in net profit of QAR 589 million compared with the first quarter of 2015."

Net operating income increased by 4% to QAR 2,075 million for the half-year ended 30 June 2015, up from QAR 1,995 million achieved in the same period in 2014.  

Net interest income was QAR 1,252 million for the half-year ended 30 June 2015, 1.6% lower than the same period of 2014, mainly due to a reduction in asset yields at AlternatifBank ("ABank"). Net interest margin decreased marginally to 2.52% as compared to the first quarter of 2015 at 2.59%.

Non-interest income was up by 14% to QAR 822 million for the half-year ended 30 June 2015 compared with QAR 722 million. The overall increase in non-interest income was due to higher net fee and commission income, higher foreign exchange gains and profit on sale of certain properties, which was partially offset by lower income from investments securities.

Total operating expenses were down by 0.6% at QAR 823 million for the half-year ended 30 June 2015 compared with QAR 828 million for the same period in 2014.

The Bank's net provisions for loans and advances were QAR 376 million for the half-year ended 30 June 2015 up 46% from QAR 257 million for the same period in 2014. Consequent to the settlement of a large real estate non performing loan (NPL), the NPL ratio has reduced to 3.40% at 30 June 2015 compared with 4.12% at the end of June 2014 and the coverage ratio increased to 86.7% as at 30 June 2015 compared to 63.1% as at 30 June 2014.

Impairment provisions on the Bank's investment portfolio reduced to QAR 12 million for the half-year ended 30 June 2015 compared with QAR 29 million for the same period in 2014.

Commercial Bank delivered balance sheet growth of 6% at the end of June 2015 with total assets at QAR 119.1 billion, compared to QAR 112.4 billion at the end of June 2014. Balance sheet growth was driven mainly by an increase of QAR 3.2 billion in lending to customers.

Loans and advances to customers were up by 4.6% to QAR 72.6 billion at 30 June 2015 compared with QAR 69.4 billion at the end of June 2014. The growth in lending has been generated, mainly, in the Commercial, Services, Contracting and Consumption Sectors.

Investment securities remained largely stable when compared to June 2014 and is up 28% to QAR 14.9 billion as at 30 June 2015 compared with QAR 11.6 billion at the end of December 2014. The increase is mainly in Treasury bills issued by the Central Bank.

Customers' deposits increased by 7% to QAR 64.1 billion at 30 June 2015, compared with QAR 59.8 billion as at 30 June 2014. The increase was mainly in time deposits to ensure maintenance of regulatory ratios.

Mr. Abdulla Saleh Al Raisi, Commercial Bank's Chief Executive Officer, commented, "The strong results of the second quarter build on the momentum of the first quarter of the year and confirm Commercial Bank is well-placed to achieve sound results for the full year. To increasingly focus Commercial Bank's returns on core income, we have begun a programme of exiting non-core real estate investments, which will be concluded by the end of the first quarter 2016. Net interest margin has reduced slightly to 2.52% due to heightened levels of competition; however, our cost to income ratio continues to decrease, reducing from 38.1% in Q1 2015 to 34.1% in the second quarter. On a quarterly year-on-year basis, loans and advances were up nearly 5% and customer deposits were also up by just over 7% as we continue to meet our customers' needs as a true innovator in financial services."

Subsidiary in Turkey

Alternatifbank ("ABank") delivered a 20% increase in net profit to TL 75 million for the half-year ended 30 June 2015 (TL 63 million for 2014).

Net operating income grew by TL 19 million to TL 302 million for the half year ended 30 June 2015, from TL 283 million in 2014, mainly due to an increase in net fees and commission income and investment income. As at 30 June 2015, ABank had grown its customer lending by 26% to TL 9.5 billion and customers' deposits increased by 14% to TL 6 billion compared with 30 June 2014.

Associates in the UAE and Oman

National Bank of Oman and United Arab Bank have achieved a strong financial performance for the half year ended 30 June 2015 with a 12% improvement in profitability as compared to the same period in 2014.

National Bank of Oman

National Bank of Oman ("NBO") achieved a net profit of OMR 28 million for the half year ended 30 June 2015 as compared to OMR 23 million, an increase of 22% over 2014. Net operating income grew by OMR 10 million to OMR 64 million, from OMR 54 million in same period 2014, mainly due to an increase in net interest income which was up 18% to OMR 45 million. As at 30 June 2015 , NBO grew its customer lending by 9% to OMR 2.4 billion and customers' deposits reduced marginally to OMR 2.5 billion compared to 2014.

United Arab Bank

United Arab Bank ("UAB") delivered a net profit of AED 344 million for the half-year ended 30 June 2015 which represents an increase of 5% over the same period in 2014.The net operating income for the half-year ended 30 June 2015 increased by 3% to AED 696 million, from AED 676million in 2014 with solid underlying performance in Net Interest Income which was up by 8%, while a decrease in Non-Interest Income by 9%, as compared to the same period in 2014. UAB's loans and advances grew by 3% to AED 18.3 billion as at 30 June 2015, with customers' deposits at AED 18.2 billion, down 2% compared to 30 June 2014.

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For more information please contact:

Ibrahim Al Emadi Jon Earl

Head of Corporate Communications Managing Director

Commercial Bank F T I Consulting

Tel: +974 4449 4748 Tel: +971 (0) 50 494 1178

Email: Ibrahim.alemadi@cbq.qa Email: jon.earl@fticonsulting.com

Notes to Editors

About Commercial Bank

Commercial Bank has total assets of QAR 119.1 billion as at 30 June 2015. 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 32 full service branches and 156 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 3.2 billion as at 30 June 2015, has 61 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 26.6 billion as at 30 June 2015, and operates 30 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. 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 is listed on the Irish stock exchange.

Commercial Bank was awarded "Best retail bank in Qatar" for 2015 by The Asian Banker based on its wide-ranging achievements over the past three years and ambitious future plans. In recognition of the Bank's innovative customer focused products and services provided to SMEs, Commercial Bank also won the prestigious "Best Commercial (SME) Bank of the Year, Qatar" award from The International Banker for the year 2015.

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. Currently the Bank owns 74.87% of ABank shares.

ABank is a mid-size Turkish bank that predominately serves medium-sized companies through a country-wide network of 64 branches in 21 cities. 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 2015, ABank had total assets of TL 13.2 billion, total loans stood at TL 9.5 billion, customer deposits of TL 6.1 billion and shareholders' equity of TL 1.02 billion.

http://wwweng.abank.com.tr