Last checked at 16 Jul 2009 08:46
For immediate release
Commercial Bank of Qatar
2009 Half Year Financial Results
Robust first half results with Net operating income up 10% to QR 1.5 billion
Wednesday 15 July 2009, Doha, Qatar: Commercialbank ("the Bank"), the largest private sector bank in Qatar, announces its financial results for the half-year ended 30 June 2009. The Bank has continued to deliver good earnings performance in the first half of 2009 in spite of ongoing volatility in the financial markets with net profit at QR 943 million.
Key financial highlights
Operating income up 10% to QR 1,496 million
Net profit at QR 943 million
Earnings per share of QR 4.41
Total assets increased by 10% to QR 59.0 billion
Customer loans grew 7% to QR 32.1 billion
Customers' deposits up 4% to QR 30.0 billion
Shareholders' equity rose by 42% to QR 10.5 billion
His Excellency, Abdulla Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercialbank said, "Commercialbank has produced robust first half results underpinned by a solid performance which reflects the Bank's strong business fundamentals and prudent policies. Qatar's economy remains stable and with continued projected growth, Commercialbank is well positioned to take advantage of the opportunities. However, global market conditions are expected to remain testing in the second half of the year. We are grateful to the Government of Qatar and the Qatar Central Bank for their clear guidance and for the proactive approach they have taken in ensuring the continued strength and security of the banking sector."
Financial Performance
Mr. Hussein Alfardan, Commercialbank's Managing Director commented, "Commercialbank's results reflect the resilience of our business model, the strength of our commercial position and our stable financial profile. We will retain prime focus on our core business competencies, with continued vigilance in our approach to risk management whilst maintaining a strong capital base and diversified liquidity position."
Net operating income for the first half of 2009 increased to QR 1.50 billion, up 10%, from QR 1.36 billion in the same period in 2008 due to higher net interest income of QR 787 million compared with QR 517 million. Proactive management of funding and optimisation of yield on assets has resulted in an improvement in net interest margin to 3.24%. Going forward, the higher cost of term deposits and the Bank's prudent approach towards new lending will exert pressure on the net interest margin in the second half of the year. In addition the Bank took action to reduce the cost of borrowing across its commercial portfolio in June.
Loans and advances to customers grew to QR 32.1 billion, up by 7.4% compared with QR 29.8 billion at 30 June 2008. The credit quality of the Bank's corporate and retail portfolios remained stable with non-performing loans, which amounted to QR 474 million, representing 1.46% of total loans and advances.
As part of the Government of Qatar's programme of initiatives to support liquidity, continued bank lending and the health of the banking sector, Commercialbank has sold loans and advances and other exposures to the Government amounting to QR 3,043 million. The Government paid QR 188 million in cash and provided QR 2,855 million in Government bonds in consideration for the assets sold.
Net fee income was QR 363 million in the first half of 2009 compared to QR 461 million in the prior period. The decline in fee income reflects the lower levels of new lending, mainly within Corporate Banking, in the first half of 2009.
General and administrative expenses increased by 9% to QR 323 million compared with QR 295 million in the first half of 2008. The rise in costs was mainly due to increased staff related expenses with headcount higher than in the first half of 2008, reflecting the continued growth and investment in the business. Depreciation was up QR 12 million to QR 50 million due, mainly, to the newly completed Commercialbank Plaza building. Costs continue to be tightly managed with the cost to income ratio increasing marginally to 23.7%, compared to 22.8% in the prior period.
The Bank's net provisions for loans and advances and investments increased to QR 254 million compared with QR 86 million in the first half of 2008. The rise in provisions is largely as a result of factors relating to the global financial crisis and reflects an impairment loss against the investment portfolio of QR 52 million, a higher provision against the retail lending portfolio of QR 105 million and a write-off of QR 97 million on the sale of loans and advances and other exposures from the Corporate book. The net operating profit before provisions rose by 10% to QR 1.1 billion reflecting the solid operating performance in the first half of 2009 but, after provisions and the results of associates, the net profit was QR 943 million, 9%, lower than the QR 1,039 million achieved in the first half of 2008.
Total assets increased to QR 59.0 billion, 10% higher than QR 53.8 billion as at 30 June 2008 reflecting a QR 2.2 billion increase in customer lending and QR 4.3 billion increase in financial investments, partially offset by lower interbank placements of QR 2.9 billion. Customers' deposits increased by 4% to QR 30.0 billion from QR 28.9 billion at the end of the prior year period.
The capital adequacy ratio at 30 June 2009 was 15.6% compared to 15.5% as at 31 March 2009. With market conditions remaining uncertain, the Bank's capital position will continue to be carefully managed and above Central Bank's minimum required level of 10%.
During the first quarter of 2009, the Qatar Investment Authority (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. The second stage of the QIA subscription is expected to take place in December 2009 at the same rate of 5%.
Commenting on the Bank's first half performance, Andrew Stevens, Commercialbank's Group Chief Executive Officer said, "The first half results are a testament to the stability of our franchise. While the operating environment continues to bring new challenges, the Bank's fundamentals remain strong enabling it to deliver sustainable value to our shareholders and customers. In the current markets we will continue to take a cautious stance on credit; achieve the right balance between growth and risk, whilst focusing on careful management of costs and convergence of operations in line with industry best practices. We thank the Qatar Central Bank for their decisive, timely, advice and guidance."
On 13 May 2009, a notable milestone of progress was achieved with the official inauguration by the Prime Minister of Qatar of the Bank's new headquarters and branch at Commercialbank Plaza. The Bank has also opened a branch at Porto Arabia in The Pearl Qatar in the first half of the year.
Associates
Commercialbank's associates National Bank of Oman (NBO) and United Arab Bank (UAB), contributed QR 75 million in the first half of 2009, compared with QR 101 million for the same period in 2008.
NBO's net operating income was up 2.2% at RO 41.8 million compared with RO 40.9 million in the first half of 2008. However NBO has made provisions of RO 4.2 million against its investment portfolio and impairment provisions of RO 2.1 million on inter-bank lending which have contributed to a decline in the net profit after tax to RO 13.5 million from RO 22.6 million in 2008.
UAB recorded good growth in 2009 with net operating income increasing by 12% to AED 231 million. Provisions for loans and advances were flat against the prior year period reflecting the Bank's conservative approach to lending and, although costs were higher due to growth in the business, the net profit rose by 11% to AED 134 million leaving UAB well positioned to benefit from future opportunities in the UAE.
Outlook
While the global economic outlook remains uncertain, Qatar's economy remains resilient with the prospect for continued future growth. Commercialbank has delivered a solid performance in the first half of the year with continued growth in its underlying business and maintains an optimistic outlook for the second half of 2009. The near-term focus will be to maintain steady and consistent progress with selective growth in lending. The Bank remains confident with the overall quality and diversity of its asset portfolio.
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http://www.rns-pdf.londonstockexchange.com/rns/7692V_-2009-7-16.pdf
| For more information please contact: Roy Leask Head of Group Corporate Communications Commercialbank Tel: +974 449 1090 Email: roy.leask@cbgroup.com.qa Anil Nair Investor Relations Commercialbank Tel: +974 420 2654 Email: anil.nair@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 shareholders' equity and total assets which were QR 59 billion at 30 June 2009. As a full service commercial bank, Commercialbank 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 28 full service branches, including 6 Al Safa Islamic branches and 135 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 June 2009, has 59 branches in Oman, 5 branches in Egypt and 1 in Abu Dhabi. UAB is headquartered in Sharjah, with total assets of AED 7.0 billion as at 30 June 2009 and operates 9 branches in the UAE.
Commercialbank has prime single 'A' credit ratings from all 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.
www.cbq.com.qa