Commercial Bank of Qatar (“Commercial Bank” or “the Bank”) announces its financial results for the year ended 31 December 2013. The Bank delivered a net profit for the year of QAR 1,605 million compared to QAR 2,012million in 2012. Profit for the fourth quarter of 2013 was up 7% to QAR 300 million compared to the third quarter of 2013.
The Bank’s draft results for the year ended 31 December 2013 have been announced following approval at a meeting of Commercial Bank’s Board of Directors. Following the acquisition of Alternatifbank (“ABank”) this year’s financial statements represent the first time that Commercial Bank is consolidating the results of a major banking subsidiary.
The Board of Directors is recommending, for approval at the Annual General Assembly on 16 March 2014, the distribution of a cash dividend of 20% of the share’s nominal value to the shareholders for 2013, which equates to QAR 2 per share, and bonus shares of 20% (one bonus share for every five shares held). The financial results and profit distribution are subject to the approval of the Qatar Central Bank.
Key financial highlights
• Operating income up 15% to QAR 3.4 billion
• Net profit of QAR 1.6billion
• Total assets up 41% to QAR 113 billion
• Customer loans and advances up 38% at QAR66.9billion
• Customers’ deposits up 53% to QAR63.4billion
• Earnings per share of QAR 6.48
• QAR 2 billion Additional Tier 1 capital raised
His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercial Bank said, “2013 was an important year for Commercial Bank as we continue to build a bank that is capable of delivering long-term value to its shareholders and customers. We invested in our international strategy with the acquisition of ABank in Turkey, which we intend to develop into a market leading Turkish bank. Following the acquisition, Commercial Bank and its Associates in the UAE and Oman are now well positioned to capture the growing trade and investment flows between Turkey and the GCC. Qatar’s infrastructure investment requirement and its rapidly diversifying economy require world-leading banking products and services. The investment we have made in the business and in our people this yearwill ensure that Commercial Bank continues to grow its market share and shareholder value.”
Mr. Hussain Al Fardan, Commercial Bank’s Managing Director, added,“The improving trends witnessed in the third quarter have continued into the fourth quarter of the year and we continue to see good momentum as we enter 2014. The prudent, higher provisioning taken during the fourth quarter, as we indicated as a potential outcome earlier in the year, resulted in net profit of QAR 1.6 billion for the year. However, net profit for fourth quarter 2013 increased by 7% over the third quarter 2013 to QAR 300 million. The improvement in our profitability and lending in the fourth quarter in addition to the continued strong performance of our Associates and the contribution of ABank give us optimism for Commercial Bank’s prospects in 2014.”
Net operating income increased by 15% to QAR 3,434 million for the year ended 31 December 2013, up from QAR 2,983 million achieved in 2012. ABank delivered net operating income for the second half of 2013 of QAR 445 million following its consolidation into Commercial Bank Group.
Net interest income was QAR 2,188 million for the year ended 31 December 2013, 17% higher than 2012, reflecting strong growth in lending activities particularly in the Real Estate and Services sectors. ABank contributed QAR 312 million, 14% of the total net interest income. Net interest margin remained stable compared to the third quarter of 2013 at 2.57%.
Non-interest income was up 11% to QAR 1,246 million for 2013 compared with QAR 1,118 million in 2012 with ABank contributing QAR 133 million. The overall increase in non-interest income was due to higher fee and commission income, higher foreign exchange income combined with lower income from investments securities.
Total operating expenses were up 40% to QAR 1,437 million for 2013 compared with QAR 1,028 million in 2012. Excluding ABank, expenses increased by 11.2% for the year compared to 2012 as Commercial Bank continued to invest in its people and infrastructure. Reported total operating expenses include ABank’s QAR 294 million of expenses following its consolidation and the one-off cost of QAR 49 million associated with the acquisition of ABank.
The Bank’s net provisions for impairment losses increased to QAR 714 million in 2013 compared with QAR 202 million in 2012, and comprised provisions of QAR 604 million for loans and advances and QAR 110 million for financial investments. Although non-performing loan ratio increased marginally to 3.6% in December 2013 from 3.3% at 30 September 2013, the coverage ratio improved to 54% as at December 2013 compared to 48% in September 2013.Impairment provisions on the Bank’s investment portfolio increased to QAR 110 million for the year ended 31 December 2013 compared with QAR 62 million in 2012, reflecting a general decline in the valuations of certain emerging market equities and currency fluctuation.
The Bank also sets aside a risk reserve against its lending as part of shareholders’ equity. At 31 December 2013, the risk reserve was QAR 1,316 million meeting the revised minimum level of 2.5% (2% for end of 2012) set by the Qatar Central Bank for the end of 2013.
Commercial Bank delivered strong balance sheet growth in 2013 increasing by 41% with total assets at QAR 113 billion compared to QAR 80 billion in 2012 which includes QAR 19 billion of assets from ABank. Balance sheet growth was driven by QAR 18 billion in lending to customers,higher balances held with Central Banks and other financial institutions which were up QAR 9 billion, combined with an increase of QAR 3.5 billion in Financial Investments.
Loans and advances to customers were up 38% to QAR 66.9 billion at 31 December 2013, compared with QAR 48.6 billion at the end of 2012. The growth in lending in 2013 was generated mainly through credit growth in the Real …
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