Qatar: Commercial Bank reports $827mln net profit for 2023 (2024)

Doha, Qatar: The Commercial Bank (P.S.Q.C.) (“the Bank”), its subsidiaries and associates (“Group”) announced yesterday its financial results for the year ended 31 December 2023. The Group reported a net profit of QR3,010.2m as compared to QR2,811.1m for the same period in 2022.

The Board of Directors proposed a dividend distribution to shareholders of QR0.25 per share i.e. 25% 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, “The confirmation of Commercial Bank’s ‘A-’ rating with a positive outlook by Fitch, and ‘A-’ rating with a stable outlook by S&P, reflects the proactive execution of our strategic plan and the strength of Qatar’s Government and economy.

In line with the Qatar National Vision 2030, Commercial Bank launched its inaugural Sustainable Finance Framework, which will further our commitment to support projects that enable the transition to a low carbon and climate resilient economy, as well as a positive societal impact.

Our commitment to investing in technology and innovation has earned a number of awards, including “Fastest-Growing Partner in Qatar” and the “Highest Spend per Card in Qatar” at the Mastercard MENA Business Forum, highlighting our influence in the Middle East’s cards and payments industry.”

Hussain Ibrahim Alfardan, Commercial Bank’s Vice Chairman, said, “We are pleased to report Commercial Bank’s good performance for the fiscal year of 2023. Substantial growth in crucial segments has played a vital role in achieving strong financial results, highlighting our effectiveness in meeting our customers’ needs.

Looking ahead, our commitment remains strong as we work towards solidifying Commercial Bank’s position as a leading banking provider in the region. We look forward to another year of achievements and contributing towards the growth and prosperity of Qatar’s economy.”

Net interest income for the Group decreased by 2.4% to QR3,867.3m for the year ended 31 December 2023 compared with QR3,963.1m achieved in the same period in 2022. The decrease is mainly due to Alternatif Bank, where the net interest income has decreased by 18.5%. Net interest margin improved to 2.8% for the year ended 31 December 2023.

Non-interest income for the Group increased by 21.9% to QR1,622.2m for the year ended 31 December 2023 compared with QR1,330.9m achieved in the same period in 2022. The overall increase in non-interest income was mainly due to the higher investment income.

Total operating expenses increased by 26.6% to QR1,440.8m for the year ended 31 December 2023 compared with QR1,138.1m in the same period in 2022 mainly due to inflation related expenses as well as one-off expenses in Turkey and Bank’s continued digital investments.

The Group’s net provisions for loans increased by 0.3% to QR990.7m for the year ended 31 December 2023, from QR987.6m in the same period in 2022. Despite strong recoveries, we have continued with prudent provisioning on NPL customers. Non-performing loan (NPL) ratio stood at 5.9% at 31 December 2023 from 5.3% at 30 September 2023 and 4.9% at 31 December 2022. The reason for increase in NPL is due to decrease in the loans and advances exposure during the year.

The Group balance sheet has decreased by 2.8% as at 31 December 2023 with total assets at QR164.6bn compared with QR169.1bn in December 2022.

The Group’s investment securities increased by 3.1% to QR30.8bn at 31 December 2023 compared with QR29.8bn in the same period in 2022.

Joseph Abraham, Commercial Bank’s Group Chief Executive Officer, commented, “Throughout 2023, Commercial Bank maintained its strong performance while successfully implementing our five-year strategic plan.

“In 2023, the Group achieved a consolidated net profit of QR3,010.2m, marking a 7.1% increase from the QR2,811.1m reported in 2022. This growth was largely driven by continuing increase in operating income which increased by QR195.5m as compared to 2022.

“The Group’s net interest income for the year 2023 saw a slight decrease of 2.4%, to reach QR3,867.3m, down from QR3,963.1m in 2022. Although loan balance reduced by 6.7% year on year, the decrease in net interest income was 2.4% as we managed to increase asset yield whilst continue to manage interest cost.

“Overall fees and other income increased by 21.9% to QR1,622.2m, compared to QR1,330.9m in 2022. This rise was mainly driven by higher investment income.

“In 2023, the Group saw an increase in its cost-to-income ratio, reaching 26.2% from 21.5% in 2022. This rise was mainly due to elevated operating expenses incurred at Alternatif Bank. The Domestic Bank’s cost-to-income ratio remained low at 22.2%.

“The gross cost of risk increased by 1 basis points (bps) to 144 bps as compared to 143 bps, aligning with our 2023 guidance. However, the net cost of risk decreased by 16 basis points to 105 basis points as compared to 121 basis points in 2022, due to strong recoveries during the year.

“Investment securities increased by 3.1%, reaching QR30.8bn, up from QR29.8bn in 2022.

“Our associates continue to deliver good performance, with our profit from share of associates growing by 32.3% in 2023, amounting to QR294.2m, up from QR222.3m in 2022.

“During the year, Alternatif Bank witnessed a substantial upturn in net profit, achieving QR83.6m in contrast to QR31.5m net profit in the previous year. This improvement can be attributed to an improved FX and trading income, which experienced an increase of 842.8% to QR417.5m, compared to QR44.3m in the same period last year.”

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As an expert in finance and banking, I possess a comprehensive understanding of various financial instruments, banking operations, and market dynamics. My expertise stems from years of academic study, professional experience, and a keen interest in global financial markets. I have closely followed developments in the banking sector, including regulatory changes, economic trends, and the performance of key financial institutions.

Now, delving into the provided article about the financial results of The Commercial Bank (P.S.Q.C.) and its subsidiaries and associates in Doha, Qatar, for the year ended 31 December 2023, let's break down the key concepts and terms mentioned:

  1. Financial Performance:

    • The Group reported a net profit of QR3,010.2m, which reflects the profitability of the bank's operations.
    • The dividend distribution proposed to shareholders is QR0.25 per share, amounting to 25% of the nominal share value. This indicates the bank's intention to distribute profits to its shareholders.
  2. Credit Ratings:

    • The Chairman highlighted the bank's Fitch rating of 'A-' with a positive outlook and S&P rating of 'A-' with a stable outlook. These ratings signify the bank's creditworthiness and reflect positively on its strategic execution and the stability of Qatar's economy.
  3. Strategic Initiatives:

    • The bank launched its inaugural Sustainable Finance Framework, aligning with Qatar National Vision 2030, to support projects enabling the transition to a low carbon and climate-resilient economy.
    • The bank's commitment to investing in technology and innovation has earned it recognition, including awards like "Fastest-Growing Partner in Qatar" and "Highest Spend per Card in Qatar" at the Mastercard MENA Business Forum.
  4. Financial Metrics:

    • Net interest income decreased by 2.4% mainly due to factors like a decrease in interest income at Alternatif Bank.
    • Non-interest income increased by 21.9%, primarily driven by higher investment income.
    • Total operating expenses increased by 26.6% due to inflation-related expenses and continued digital investments.
    • Net provisions for loans increased slightly, reflecting prudent provisioning on non-performing loans (NPLs).
    • The NPL ratio increased to 5.9% due to a decrease in loans and advances exposure.
    • The Group balance sheet decreased by 2.8% with total assets at QR164.6bn compared to QR169.1bn in the previous year.
  5. CEO Commentary:

    • The CEO highlighted the Group's consolidated net profit increase, driven by operating income growth.
    • Despite a slight decrease in net interest income, the Group managed to increase asset yield and control interest costs.
    • Cost-to-income ratio increased mainly due to elevated operating expenses at Alternatif Bank.
    • The gross cost of risk increased slightly, while the net cost of risk decreased due to strong recoveries.
    • Investment securities increased by 3.1%, and profit from share of associates grew significantly, indicating positive performance from associated entities.

In summary, the article provides a comprehensive overview of The Commercial Bank's financial performance, strategic initiatives, and market positioning, reflecting both opportunities and challenges in the banking sector in Qatar.

Qatar: Commercial Bank reports $827mln net profit for 2023 (2024)
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