Commercial Bank Group recorded a consolidated net profit of QR 1.4 billion in the first half of 2022 (H1), up 7.9% compared to the same period last year, mainly due to an improvement in the net interest income and an increase in contributions from its associates.
Total commercial banking assets stood at QR 176.4 billion in the first half, up 8.8% (from QR 162.1 billion) in June 2021. The increase was “mainly due to banks and investment securities”.
The bank reported loans and advances to customers of QR 101.2 billion, up 0.6% in June 2021 and 2.9% in March 2022.
Commercial Bank customer deposits amounted to QR 89.3 billion, up 8.5% in June 2021 and 5.7% in March 2022. Low cost deposits increased by 11% due to various cash management initiatives and digital products offered by the bank.
Commercial Bank Chairman Sheikh Abdullah bin Ali bin Jabor al-Thani said: “Qatar has continued to show resilience in overcoming the challenges facing the global economy to record economic growth of 2.5 % in the first quarter of 2022 compared to the previous year.
“With a strong legislative and regulatory framework created by the Government of Qatar and higher hydrocarbon export achievements, Qatar is expected to be the fastest growing economy in the GCC in 2023 and 2024. With the preparation for the World Cup on track and strong economic fundamentals, this continues to support strong investor confidence in Qatar’s economy, which provides a strong operating environment for Commercial Bank.
Commercial Bank Vice President Hussain Alfardan added, “Commercial Bank is making solid progress in its strategic plan, and the strong confidence of investors and financial counterparty in the bank has been recognized by the market thanks to our recent $750 million Asian syndicated term loan facility, which was 2.35x oversubscribed. This confidence is validated by our constant ability to provide innovative banking services and solutions to our customers. Additionally, with the upcoming FIFA World Cup expected to inject up to $17 billion into the Qatari economy, Commercial Bank is well positioned to continue to generate growth.
The Group’s net provisions for loans and advances increased by 20.8% to QR 501.8 million for the six months to June 30, from QR 415.2 million for the same period in 2021. increase in provisions is mainly due to continued prudent provisioning on NPL customers. .
The non-performing loan (NPL) ratio increased to 4.5% as of June 30, from 4.1% in the same period last year. The loan coverage ratio decreased to 103.2% as of June 30 from 112.1% in June 2021, but increased from 100.2% in March this year.
Joseph Abraham, Commercial Bank Group Chief Executive, said: “Commercial Bank has released a positive set of results for the six months ended June 30, maintaining the momentum of the first quarter as we make good progress in our strategy.
“The group recorded a consolidated net profit of QR 1.4 billion for the period, up 7.9% compared to the same period last year, mainly due to an improvement in net interest income and to an increase in contributions from our associates.
“Group net interest income for the six months ending June 30 increased by 10% to QR 2 billion compared to the same period last year. The growth was driven mainly by the revaluation of assets due to the increase in interest rates, which had a positive effect on interest income, which increased by 10.7% In addition, the net interest margin improved from 2 .6% to 2.8%.
“Total normalized fee and other income experienced a healthy growth of 18% to QR 595.6 million compared to the same period last year, mainly due to an increase in foreign exchange and trading income. Investment income decreased by QR 122.6 million due to increased volatility in global capital markets, despite this, normalized total operating income increased by 11.7%.
“On a normalized basis, the Group’s cost/income ratio improved to 22.6% from 25.3% in the same period last year thanks to the growth in operating income.
“As a result, operating profit in the first six months of 2022 increased by 15.9% to QR 2 billion compared to the same period last year.
“Net provisions are in line with guidance provided on the cost of risk as we continue our conservative provisioning approach.
“Group loans and advances amounted to QR 101.2 billion for the first six months of 2022, up 0.6% compared to the same period last year, mainly due to growth loans to the private sector, mainly in the trade and services sectors. Overall loan growth was impacted by government repayments due to the strong fiscal position.
“Customer deposits increased to QR 89.3 billion, up 8.5% compared to the same period last year. Low-cost deposits increased by 11%, which contributed positively to our net interest margin.
“The National Bank improved its normalized cost-income ratio to 20%, from 21.1% in the same period last year, as the bank continues to focus on improving efficiency through technology.
“Our associates continue to deliver better performance. Net profit of associated companies increased to QR 106.4 million, up 68.2% from the same period last year.
“During the period, the Group applied hyperinflationary accounting to Alternatif Bank in accordance with the requirements of International Accounting Standards (IAS) 29, resulting in a non-cash “net monetary loss” of QR 69.2 million recorded in the Group’s income statement This accounting adjustment is neutral on the Group’s total equity.
“Alternatif Bank recorded a net profit of QR 84 million for the first half of 2022, compared to a net loss of QR 13.8 million last year, mainly due to improved foreign exchange and trading income. With the hyperinflation adjustment, the net contribution from Alternative Bank was QR 58.6 million.”