Commercialbank announces record profits for 2007

Net profit for 2007 was QR1.391bn, up QR528m (61.2%) on 2006. This represents a return of 99.2% on paid-up capital.

Commercialbank has created significant value for its shareholders, with total shareholder return, reflecting share price performance and dividends, up 92.7% in 2007, and growing by 71.9% on a compound annual basis since 2001. The Board, at its meeting held on 20th January, has recommended a distribution comprising a cash dividend of 40% and a bonus share issue of 30%, a total equivalent of QR 981 million, reward for an outstanding year of performance.

To fund further growth both organically and through acquisition, Commercialbank intends to raise additional capital in 2008 through a rights issue to existing shareholders. The issue price proposed by the Board is QR100 per share, consisting of a nominal value of QR10 per share and a share premium of QR90. This issue will take place in two phases, with a 10% issue being made in the second quarter of 2008 and a further 10% issue being made in the fourth quarter of 2008. With the issue of these shares, the share capital will be increased by 21% from QR1.822bn to QR2.205bn by way of issuing 38,263,116 shares to existing shareholders. Following these issues, the Bank's capital will stand at QR2.205bn (220.46m shares).

These rights issue proposals are subject to the approval of the regulatory authorities in Qatar. Detailed terms and conditions of the rights issues will be communicated to the shareholders after approval at the Extraordinary General Meeting.

Commercialbank's record results reflect a strong performance across all areas and the rate of growth in income exceeded that of costs, with the cost to income ratio improving from 33.6% in 2006 to 27.8% in 2007.

Total income increased by 45.9% to QR 1.973 billion, reflecting a 29.7% growth in net interest income, a 72.5% growth in fees and commission and a 43.8% growth in other income.

This impressive performance resulted in an improvement in key shareholder value indicators, with return on shareholders' equity increasing from 15.2% to 23.4% in 2007, and earnings per share up from QR6.16 to QR9.92.

Total assets grew by QR15.039bn (49.5%) to QR45.397bn, with lending volumes up by 44.1% to QR25.021bn and deposits growing by 49.9% to QR25.766bn.

One of the cornerstones of Commercialbank's growth strategy is regional expansion within the GCC. National Bank of Oman, in which Commercialbank has a 34.9% shareholding, continues to perform well and will shortly announce record results. In December 2007, Commercialbank took a further step in regional expansion by acquiring a 35% interest in United Arab Bank, headquartered in Sharjah. Commercialbank has executed management contracts with both banks.

In meeting Commercialbank's strategic objectives, it must be stressed that sound control of risk and high standards of corporate governance are in place at all times and Commercialbank is committed to maintaining its strong reputation in this area.

During 2007, Commercialbank continued to focus on providing quality products and services to both its retail and corporate customers, to whom Commercialbank would like to express its gratitude for their loyalty over the past year.

Commercialbank's performance is also the result of the hard work, energy and determination of its staff and it is their continued and committed endeavours that enable Commercialbank to achieve success.

Qatar has enjoyed very favourable economic conditions during 2007, driven by strong growth in hydrocarbon production and high crude oil and gas prices and the banking sector remains strategically important and integral to this economic development. Commercialbank is committed to remaining at the heart of the development and diversification of Qatar's economy.

These results are based on the audited financial statements which are subject to final approval of Qatar Central Bank.

Commercialbank is the leading private sector and second largest commercial bank in Qatar, by total assets, shareholders' equity and market capitalisation, and has total assets of QR45.4bn. Commercialbank is a full service commercial bank and offers a complete range of retail banking, card services, wealth management, corporate banking, investment banking, Islamic banking, trade finance, and corporate internet banking services. Commercialbank has a country wide network of 24 full service branches and 118 ATMs.

Commercialbank 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 RO1.3bn as at 30th September 2007, and has 51 branches and 93 ATMs in Oman, 5 branches and 5 ATMs in Egypt and 1 branch and 2 ATMs in Abu Dhabi. UAB is headquartered in Sharjah, with total assets of Dhs5.0bn as at 30th September 2007 and operates 9 branches in the UAE.

Commercialbank ranks high among the top 100 Arab Banks and is one of the strongest capitalized and fastest growing banks in the economically vibrant GCC region. Commercialbank has prime single A credit ratings from all the three globally recognized rating agencies - Moody's, Fitch and S&P.