Tribune News Network
Commercial Bank on Tuesday reported a net profit of QR2.811 billion for the year ended December 31, 2022, as against 2.304 billion for 2021.
The Board of Directors proposed a dividend of QR0.25 per share or 25 percent of the nominal share value.
The financials and proposed dividend distribution are subject to Qatar Central Bank approval and endorsement by shareholders at the Bank’s Annual General Meeting.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “Our robust financial and operational performance for the year 2022 reflects our clear strategy and the Qatari economy’s growth over the last year. 2022 will be remembered for the successful execution of the 2022 FIFA World Cup, proving Qatar’s ability to execute flawlessly on world events and draw a global audience, reinforcing its efforts to serve as an international destination for tourism, commerce, sports and culture.
“Commercial Bank is privileged to have played a role in the continued development of Qatar’s banking sector particularly in the digital space and in servicing its community to the highest degree in 2022. We look forward to another positive year in 2023, in line with the country’s projected upward trajectory.”
Hussain Alfardan, Commercial Bank’s Vice Chairman, added, “Commercial Bank has seen a strong 2022 affirmed by good growth across our key segments and a healthy bottom-line which was the second consecutive year of record profit achievement. Our performance stems from our five-year strategic plans, very strong execution and Qatar’s positive macroeconomic fundamentals, which we expect to continue into the new year.
“Our robust efforts on the financial and operational front have resulted in the Bank winning several significant accolades, including “Bank of the Year” in Qatar by The Banker Magazine. We continue to support the Bank’s management in their efforts to position Commercial Bank as the leading bank in Qatar and look forward to continuing to realize this vision in 2023.”
Operating profit for the Group increased by 14.8 percent to QR4.155 billion for 2022, compared with QR3.621 billion achieved in 2021.
Net interest income increased by 10.9 percent to QR4.106 billion for 2022 compared with QR3.701 billion in 2021. Net interest margin increased to 2.8 percent compared with 2.7 percent achieved in the same period in 2021. The increase in margins is mainly driven by improvement in funding base and repricing of our assets.
Normalized non-interest income for the Group increased by 11.4 percent to QR1.192 billion (-15.1 percent on reported basis) for 2022 compared with QR1.069 billion achieved in 2021. Although investment income is negative due to market volatility, the overall increase in normalized non-interest income was mainly due to higher FX and trading income.
Normalized total operating expenses decreased by 0.7 percent to QR1.142 billion (-23.1 percent on a reported basis) for 2022 compared with QR1.150 billion in the same period in 2021.
The Group’s net provisions for loans and NPLs increased by 7.3 percent to QR1.184 billion for 2022, from QR1.104 billion in the same period in 2021. The increase in provisions was mainly due to continued prudent provisioning on NPL customers. Non-performing loan (NPL) ratio stood at 4.9 percent at 31 December 2022 from 4.7 percent at 31 December 2021, whilst loan coverage ratio strengthened to 105.4 percent at 31 December 2022 from 97.4 percent at 31 December 2021.
The Group balance sheet has increased by 2.2 percent as at 31 December 2022 with total assets at QR169.1 billion compared with QR165.5 billion in December 2021. The increase was mainly in due from banks and investment securities.
The Group’s loans and advances to customers were flat at QR98 billion at 31 December 2022.The overall loan book was impacted by the government repayments of temporary overdrafts, which was offset by growth in private sector loans by 4 percent
The Group’s investment securities increased by 11.6 percent to QR29.8 billion at 31 December 2022 compared with QR26.7 billion in the same period in 2021 mainly due to increase in government
The Group’s customer deposits increased by 1.5 percent to QR83.2 billion at 31 December 2022, compared with QR82 billion in the same period in 2021. Low cost deposits increased by 6.4 percent due to the various cash management initiatives and digital products that the bank offers.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Commercial Bank reported strong set of results for the year ended 31 December 2022, maintaining the momentum and strong execution of our five-year strategic plan.
“The Group reported consolidated net profit of QR2.8 billion for the period, up 22 percent compared to the previous year, driven mainly by an improvement in operating income and higher contributions from our associates.
“Normalized operating income reached QR5.3 billion, up 11 percent year-on-year, boosted by 10.9 percent growth in net interest income and as well as an increase in non-interest income by 11.4 percent. Net interest margin improved to 2.8 percent from 2.7 percent as we continue to improve our funding base and reprice assets. Normalized fees and other income grew 11.4 percent to QR1.2 billion, mainly driven by an increase in FX and trading income.
“On a normalized basis, the Group’s cost-to-income ratio improved to 21.6 percent compared to 24.1 percent during 2021 on account of operating income growth. The Domestic bank’s cost to income ratio stood at 19.2 percent, down from 20.5 percent during 2021.
“Net provisions increased by 7.3 percent compared to last year due to continued prudent provisioning. Net cost of risk stood at 121 basis points, within the guidance provided for 2022. As of 31 December 2022, NPL ratio stood at 4.9 percent compared to 4.7 percent in 2021, whilst coverage ratio strengthened to 105.4 percent from 97.4 percent in 2021 reflecting the Bank’s prudent approach on credit risk management.
“Despite higher provisions, net profit improved by 22.0 percent compared to last year.
“Investment securities increased by 11.6 percent to QR29.8 billion compared to QR26.7 billion for the previous year.
“Loan and advances were flat as the government repaid its temporary overdrafts. Despite a decrease in the government lending book, private sector loans increased by 4 percent
“Customer deposits increased to QR83.2 billion, up by 1.5 percent year-on-year. Low-cost deposits increased by 6.4 percent, which has helped reduce the cost of funding and positively impacted our net interest margin.
“Our associates continue to deliver improving performance with net profit from associates of QR222.3 million compared to the previous year profit of QR129.3 million.
“Alternatif Bank reported a net profit of TL1,066.3 million compared to a net profit of TL76.5 million for the previous year. However, the results for 2022 are impacted by the hyperinflation accounting by TL 943.2 million. With hyperinflation adjustment, the net contribution of Alternatif Bank is TL 123.1 million.
“Lastly, S&P Global Ratings upgraded their long-term issuer credit rating on Commercial Bank to ‘A-’ from ‘BBB+’ and affirmed the ‘A-2’ short-term rating. The outlook remained stable. This reflects recognition by external agencies of the strong execution of our strategy resulting in improved operating performance and strong capitalization.”