The Commercial Bank (CB), its subsidiaries and associates (Group) on Wednesday reported Group’s net profit of QR2.3 billion for 2021, an increase of 77.1 percent as compared to QR1.3 billion for the same period in 2020.
The board of directors proposed a dividend distribution to shareholders of QR0.16 per share, 16 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.
Commercial Bank Chairman Sheikh Abdulla bin Ali bin Jabor Al Thani said, “During 2021, Qatar’s economy improved on the back off the country’s robust vaccination programme, a significant strengthening of energy prices particularly gas and the continued investment in infrastructure in the lead up to the 2022 World Cup. Furthermore, GDP is expected to increase by over 4 percent in 2022, which will be supported by all the previously mentioned factors and complemented by the projected spike in tourism with the upcoming FIFA World Cup.”
“During the past year, Commercial Bank has continued to focus on supporting the nation’s economy, through providing world-class banking solutions and innovative products, in line with the support programmes implemented by the Central Bank of Qatar. We believe that 2022 will offer significant opportunities in the market, that will present further growth for Commercial Bank,” he said.
Commercial Bank Vice Chairman Hussain Alfardan said, “Our growth is testament to the continued investments in people, technology and infrastructure we have made in the business. As part of our commitment to support Qatar’s Vision 2030 and promote Qatar as a global hub for business, we continued to enhance our digital service offering, to ensure seamless banking for all our customers. In recognition of these efforts, Commercial Bank was awarded several accolades over the course of the year recognising our leading position in digital leadership, positioning us for further growth in 2022.”
The normalised operating income of the bank for 2021 stood at QR4,771.4 million, up by 12.4 percent (+20.4 percent on reported basis).
Net interest income for the Group increased by 19.4 percent to QR3,701.5 million for 2021 compared with QR3,100.1 million achieved in 2020. Net interest margin increased to 2.7 percent compared with 2.4 percent achieved in 2020. Although asset yields have reduced, the increase in margins is mainly due to proactive management of the cost of funding.
Normalised non-interest income for the Group decreased by 7.4 percent to QR1,069.9 million (+23.1 percent on reported basis) for 2021 compared with QR1,155.8 million in 2020. The overall decrease in non-interest income was
mainly due to lower FX and trading income from Alternatif Bank driven by sharp increase in Normalised total operating expenses increased by 4.3 percent to QR1,150.3 million (+35 percent on a reported basis) for 2021 compared with QR1,103.2 million in 2020.
The Group’s net provisions for loans and advances increased by 31.4 percent to QR1,099.4 million for 2021, from QR836.4 million in 2020. The increase in provisions was mainly due to continued prudent provisioning on NPL customers. The non-performing loan (NPL) ratio increased to 4.7 percent in 2021 from 4.3 percent in 2020. The loan coverage ratio decreased to 97.4 percent in 2021 compared with 101.6 percent in 2020.
The Group’s balance sheet increased 7.7 percent in 2021 with total assets at QR 165.5 billion, compared with QR153.6 billion in 2020. The increase was mainly due to an increase in balances with Central Bank and loans and advances.
The Group’s loans and advances to customers increased by 1.3 percent to QR 98 billion in 2021 compared with QR96.7 billion in 2020. The increase was despite a reduction in the Government temporary borrowing in Q4 21 as it partly repaid its systemwide temporary borrowing. The increase was mainly in the commercial, services and government public sectors.
The Group’s investment securities increased by 3.7 percent to QR26.7 billion in 2021 compared with QR25.8 billion in 2020.
The Group’s customer deposits increased by 8.1 percent to QR82 billion in 2021, compared with QR75.8 billion in 2020. The increase is mainly in time deposits however, current and savings deposits have increased by 5.1 percent due to the various cash management initiatives and digital products that the bank offers.
Commercial Bank Group CEO Joseph Abraham said, “Commercial Bank reported solid results for 2021. The Group reported a net profit of QR2.3 billion for the period, up 77.1 percent compared to the same period last year primarily driven by improved net operating income in the domestic business and an improved contribution from associates.”
Abraham said, “Gross provisions were down by 4.4 percent mainly due to lower ECL charges for the year, however net provisions for the period increased by 12 percent mainly due to continued prudent provisioning on NPL customers and lower recoveries in 2021. NPL coverage ratio decreased to 97.4 percent compared with 101.6 percent for the comparative period.
“Group loans and advances were QAR 98.0 billion at the end of 2021, up by 1.3 percent compared to the same period in 2020, and customer deposits increased to QR82 billion, up by 8.1 percent. Low cost deposits increased by 5.1 percent which has helped reduce the cost of funding and positively impacted our net interest margin which grew from 2.4 percent to 2.7 percent.”
He said, “Alternatif Bank’s performance for 2021 was impacted by the continued volatility in the Turkish market and the depreciation of the Turkish lira. The bank reported a net profit of QR23.7 million during the period compared with QR57.5 million for the same period in 2020. The contribution from our share of associates in 2021 improved by 79.8 percent compared to 2020 driven mainly by reduced impairments and better performances at UAB and NBO.”