The Commercial Bank (the Bank), its subsidiaries and associates (Group) announced its financial results for the first quarter (Q1) ending March 31, 2024, on Tuesday.
The Group reported a net profit of QR801.6 million representing a 6.7 percent increase as compared to last year’s reported net profit of QR751.3 million for Q1 2023, which was restated to QR577.3 million for the same period in 2023.
The Group has restated the Q1 2023 numbers due to the restatement of the year-end 2023 financial statements for the underlying derivative on the share option performance scheme. Accordingly, the current Q1 2024 figures provided are compared with the previous year restated numbers.
Sheikh Abdulla bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, “In the first three months of 2024, Commercial Bank maintained consistent progress. The confirmation of our upgrade in Fitch rating from ‘A-’ to ‘A’ with a stable outlook, underscores our strong domestic franchise and stable operating environment.”
Hussain Ibrahim Alfardan, Commercial Bank’s Vice Chairman, said,“We are pleased to report on Commercial Bank’s continued positive progress in the first quarter of 2024, reflecting the positive momentum of the Qatari economy and our consistent focus on operational excellence. Our financial performance was maintained in a scenario of muted loan growth due to elevated interest rates, demonstrating our ability to adapt to our customers’ evolving needs and develop new business streams.
“Commercial Bank has successfully issued a $750 million Regulation S 5-year Bond which was oversubscribed by 2.4 times. This marks our return to the public international capital markets after a three-year gap. The overwhelming demand for this transaction underscores the strength of our credit and the demand for Qatari institutional paper among international investors.”
Operating profit for the Group increased by 18.9 percent to QR1,012.5 million for the quarter ended 31 March 2024 compared with QR851.8 million achieved in the same period in 2023.
Net interest income for the Group decreased by 3.0 percent to QR957.7 million for the quarter ended 31 March 2024 compared with QR987.0 million achieved in the same period in 2023. The overall decrease is mainly due to higher cost of funding in the market, due to increase in deposit cost.
Non-interest income for the Group decreased by 4.2 percent to QR291.7 million for the quarter ended 31 March 2024 compared with QR304.4 million achieved in the same period in 2023. The overall decrease in non-interest income was mainly due to reduced FX and trading income.
Total operating expenses decreased by 46.1 percent to QR236.8 million for the quarter ended 31 March 2024 compared with QR439.6 million in the same period in 2023 mainly due to decreased staff related LTIP (long term incentive program) costs, a consequence of decline in share price as required by IFRS 2.
The Group’s net provisions for loans decreased by 18.5 percent to QR130.4 million for the quarter ended 31 March 2024, from QR160.0 million in the same period in 2023, due to higher recoveries and ECL release. Non-performing loan (NPL) ratio stood at 6.0 percent at 31 March 2024 from 5.0 percent at 31 March 2023. The reason for increase in NPL is due to decrease in the loans and advances exposure during the year.
The Group balance sheet has increased by 2.0 percent as at 31 March 2024 with total assets at
QR166.2 billion compared with QR163.0 billion in March 2023. The increase was mainly due to increase in due from banks.
The Group’s loans and advances to customers has decreased by 4.7 percent to QR89.7 billion at 31 March 2024 as compared to QR94.1 billion in March 2023.This is largely due to effects of rising interest rates and at Alternatif Bank level, due to the Turkish lira depreciation.
The Group’s customer deposits increased by 4.3 percent to QR79.4 billion at 31 March 2024, compared with QR76.1 billion in the same period in 2023. This is largely due to increase in time deposits by customers.
Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “During the first three months ended 2024, Commercial Bank continued to demonstrate a stable and sustainable performance while making further progress on our five-year strategic plan, resulting in solid financial results. This success is notably underscored by Fitch’s upgrading of our rating to ‘A’ with a stable outlook.
“The Group’s net interest income for Q1 2024 saw a decrease of 3.0 percent, to reach QR957.7 million, down from QR987.0 million in Q1 2023, due to higher cost of funding in the market. The decrease is attributable to the decrease in asset levels as the loans and advance declined by 4.7 percent.”
The overall fees and other income decreased by 4.2 percent to QR291.7 million, compared to QR304.4 million in Q1 2023. This was mainly driven by reduced FX and trading income.
The Group’s cost-to-income ratio improved to 19.0 percent during the period on the account of improved operating expenses, compared to 34.0 percent in Q1 2023. This reduction in expenses was largely attributed to decreased staff related LTIP compensation costs, a consequence of IFRS 2 due to the decline in share price.
Net provisions down by 12.1 percent to QR240.5 million compared to QR273.5 million in Q1 2023.
The gross cost of risk decreased by 5 basis points (bps) to 89 bps as compared to 94 bps. However, the net cost of risk decreased by 8 basis points to 58 basis points as compared to 66 basis points in 2023, due to strong recoveries and ECL release during the period.
Investment securities experienced a decrease of 5.7 percent, reaching QR28.1 billion, down from QR29.8 billion in Q1 2023.
Customer deposits increased by 4.3 percent during the period, at QR79.4 billion, while net loans and advances to customers fell by 4.7 percent, to 89.7 billion from QR94.1 billion as compared to the same period in Q1 2023. This is largely due to increase in time deposits by customers. In addition, low-cost deposits remained relatively stable at QR29.6 billion, compared to QR30.1 billion in the previous year.
