Last checked at 21 Jul 2008 07:00
COMMERCIALBANK ANNOUNCES RECORD PROFITS IN FIRST HALF 2008 NET PROFIT RISES 66% to QR1.04 billion
His Excellency Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercialbank, announced today that the Bank had achieved yet another record result, with net profits rising to QR 1.04 billion in the first half of 2008, an increase of 66% over the same period last year.
Record Performance
"Our performance continues to be inspired by Qatar's visionary leadership and to benefit from the rapid growth of the economy" said HE Abdullah Bin Khalifa Al Attiyah. "The increased scale of economic activity in Qatar and our diversification strategy have enabled strong growth in all of our core businesses. Earnings per Share, before dilution, have jumped from QAR 3.4 in the same period last year to QAR 5.7 for this period." he added. "The success of the recent large capital raising exercise, which included the largest globally, distributed GDR issue out of the GCC region, marks yet another milestone in the Bank's history. I am truly grateful to our loyal and supportive family of shareholders and new investors, whose confidence in the Bank and its management has contributed in large measure to this overwhelming success."
Mr. Hussein Alfardan, Commercialbank's Managing Director, stated that Bank's superior growth and impressive operating performance over many years, together with the success of the regional diversification strategy, have now firmly established Commercialbank as a major GCC banking group. Highlights of the strong growth in the first half of 2008 are rise in Total assets size to QR 53.8 billion, reflecting 49 % growth over the end June 2007 level, increase in Total loans and advances by 36% to QR 29.8 billion, and growth in customer deposits by 36% to QR 28.9 billion. The Bank's capital base has also strengthened by QAR 3.276 billion, following the successful issue of a total of 24 million new ordinary shares, at a price of QAR 136.5 per share, which will be fully reflected in the Bank's books in July 2008.
"Our key focus this year will be on sustaining the robust growth of our key business lines, with continued investments in new products, human resources and technology. At the same time, we will continue strategic diversification into new business areas where appropriate, and work on optimizing business and cost synergies from our expanded regional presence," added Mr. Alfardan.
Strong Capital base will sustain rapid growth
Mr. Andy Stevens, Commercialbank's Group Chief Executive Officer, announced that "Commercialbank's strategy, which has generated a compounded annual growth rate of over 50% in all key measures over the last five years, is today a blend of both organic and inorganic business diversification. The Bank has maintained high asset quality, whilst at the same time it improved its efficiency ratios. Despite the challenges of heightened competition and pressure on overhead costs, the management has been able to improve the Cost to Income ratio to 24.5% from 26.9% a year earlier, and Return on Average Equity has improved to 32.8% from 25.3% recorded for the same period last year. Similarly Return on Average Assets has also improved to 4.2% from 3.8% a year ago."
Mr. Stevens added, "Commercialbank is delighted with the overwhelming success of our recent equity raising exercise, which has significantly strengthened our Capital ratios and will enable continued growth of our diversified businesses. We are very pleased with the strong demand for Commercialbank GDRs and significant over-subscription from global institutional investors across the UK, Europe, USA, as well as the GCC and Asia, and despite the challenging market conditions presented by turbulent and weak global equity markets."
Mr Alfardan highlighted that although the recent issue of new shares was on a market basis, in contrast to the market tradition of a deep discount to market price, the Bank had preserved shareholders rights, by offering them the first priority pre-emptive right to subscribe for new Rights shares. Only the unsubscribed shares from the Rights issue were then offered to international institutional investors in the form of GDRs, or placed privately.
Review of Business
In his review of the Bank's business for the first half of 2008, Mr Michael Azmi-Loe, CEO of Commercialbank stated that all business lines have performed very well. "Our Corporate Banking franchise registered strong growth and remains the major contributor of operating income. Continued growth of the private sector in Qatar and strong credit demand enabled a 33.39% year on year growth in loans, with strong contributions from the trading, real estate, services, as well as from the SME, contractor & GCC corporate business."
"Investment banking has also achieved superior performance and returns from proprietary investments, asset management and Treasury activity. Commercialbank's flagship Al Waseela mutual fund, recorded net asset value growth of 41% over the first half of 2008, compared to the rise of 24% in the DSM 20 Index, reflecting a strong local market and also a successful investment strategy. The Pearl UDC Qatar Real Estate Fund was also successfully marketed to investors, with Commercialbank acting as collection agent.
Al Safa Islamic banking has expanded the range of services offered to the corporate sector. Al Safa was one of the Lead Arrangers in Sukuk financings for large real estate projects for Salam Bounian and United Development Company ("UDC"). Commercialbank-Al Safa has also recently secured an important mandate from Gulf Cement Company, to be the sole Arranger and Underwriter of the financing of a new green-field cement plant.
Our Retail Banking business is known for its high service quality and innovation, and amongst this year's new initiatives, I would highlight the very successful launch of the eSavings account, the first of its kind in Qatar. Our Residential Property Financing continues to be a market leader with an increase in total financing of 56% over the first six months of this year. Our retail growth continues to derive competitive leverage from product innovation, process improvement, and our long term relationships with leading developers.
The Bank has adequate liquidity and funding to support the robust loan growth, with funding sources well diversified across retail and corporate customer deposits, and term funding from existing syndicated loan and bond issues."
Success of Regional Diversification
Mr Stevens, the Group CEO of the Bank stated that "We are also pleased that both our affiliates - National Bank of Oman and United Arab Bank, - have recorded strong growth and profitability over the first half of this year, in line with our expectations, and have contributed almost 10% of our operating income for the first half. Our investments in these banks, which are carried at book value, have grown in market value. In the case of NBO, the appreciation is 119% above the initial acquisition cost in July 2005."
Mr Stevens added, "in line with the group strategy implemented across the Cb Alliance banks, the key business units at Commercialbank, NBO and UAB now meet and exchange ideas on a regular basis, and have developed collaborative strategies to increase market share of regional corporate business at all three banks."
Commercialbank implements a policy of commitment to the Qatari community, and actively supports local charities, community service projects and humanitarian works, as well as the arts and sports. Commercialbank's sponsorship of the Qatar Masters has taken the event to a new level by placing Qatar's name in the international sports arena. Highlighting Commercialbank's initiatives and support to Qatar's focus on education, Mr. Stevens stated, "we have expanded our Graduate Management Training and the Summer Internships Programs. We are investing in today's youth to become tomorrow's leaders, as demonstrated by our sponsorship of the Commercialbank Chair in Banking Studies at Qatar University."
In closing, Mr. Stevens emphasized, "Commercialbank's continued commitment to superior and sustainable growth in all its core businesses, and to deliver enhanced value to its shareholders, customers and other partners."
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