Commercial Bank of Qatar Financial Results for the nine months ended 30 September 2011

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1 Commercial Bank of Qatar Financial Results for the nine months ended 30 September 2011 Commercialbank delivers 14% increase in net profit to QR 1.51 billion Monday 17 October 2011, Doha, Qatar: Commercial Bank of Qatar ( Commercialbank or the Bank ) announces its financial results for the nine months ended 30 September The Bank delivered a strong net profit of QR 1.51 billion, a 14% increase, compared with QR 1.33 billion for the same period in The net profit for the third quarter was QR 552 million 8% higher than the second quarter of Key financial highlights Non-interest income up 22% to QR 831 million Net operating income up 12% to QR 2.2 billion Net Profit up 14% to QR 1.51 billion Earnings per share of QR 6.2 Customer loans and advances up 20% to QR 41.5 billion Customers deposits up 16% at QR 36.9 billion His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of the Board of Directors of Commercialbank said, The Qatar economy continues to outperform with strong growth forecast for the full year. The private sector is showing ongoing signs of recovery and we have seen increased activity this year. Commercialbank has continued to identify opportunities to grow its business and has delivered a strong set of results; this will remain our ongoing focus. 1

2 Financial Performance Mr. Hussain Al Fardan, Commercialbank s Managing Director, commented on the nine months financial performance, Commercialbank has performed strongly in 2011 achieving continued growth in its chosen market segments following the strategic realignment of its Corporate and Retail businesses. The results demonstrate positive momentum in both revenue and lending growth and we will look to maintain this for the remainder of the year. Net operating income was up 12% to QR 2.16 billion for the nine months ended 30 September 2011 compared with QR 1.93 billion for the same period in Net interest income increased by 6% to QR 1.33 billion in 2011 compared with QR 1.25 billion for the nine months ended 30 September 2010 and was also up by 6% to QR 466 million in the third quarter of 2011 against QR 442 million in the second quarter. The progressive reduction in the cost of deposits during 2011 has resulted in competitive pressure on lending pricing which has, in turn, resulted in a reduction in the Bank s net interest margin to 3.5% in 2011 from 3.7% for the same period in Non-interest income grew by 22% to QR 831 million in 2011 compared with QR 682 million in the same period in 2010 due to higher fee and commission income, an increase in gains on investments and dividend income, as well as improved net income from the Islamic business. Net fee and commission income was up 15% to QR 492 million against 2010 reflecting increased loan-related fees and credit card revenue. The Bank s total operating expenses were up 10% in 2011 to QR 634 million from QR 578 million in 2010 due to higher marketing expenditure, and costs associated with the business transformation programme and the strategic outsourcing partnership. The cost to income ratio decreased to 27.5% in 2011 from 28.3% in Net provisions for loans and advances increased to QR 123 million in 2011 from QR 57 million in the nine months ended 30 September 2010; net lending provisions for the third quarter, however, were in line with the second quarter at QR 35 million. Asset quality continues to improve with a reduction in the non-performing loan ratio to 2.74% at 30 September 2011 from 3.16% at 31 December 2010 and 2.99% at 30 June Total provisions of QR 43 million were required against the Bank s investment portfolio for the nine months ended 30 September 2011 compared with QR 81 million for the same period in Despite the lower provision in the third quarter, pressure remains on certain investment valuations due to ongoing volatility in global capital markets. 2

3 The Bank s total assets increased by 17% to QR 70.4 billion at 30 September 2011 compared with QR 60.2 billion at the end of September 2010, and were up 13% from QR 62.5 billion at 31 December The increase in total assets was due to growth in loans and advances to customers and in financial investments. Loans and advances to customers grew by 24% to QR 41.5 billion at 30 September 2011 compared with QR 33.6 billion at the end of December 2010, an increase of QR 7.9 billion. Financial investments were up by QR 2.5 billion since the end of December 2010 due, primarily, to investments of QR 2.1 billion in Qatar Government bonds. Customers deposits increased by 16% to QR 36.9 billion at 30 September 2011 compared with QR 31.9 billion at the end of September 2010 and by 11% since 31 December The Bank s capital position remains well above the Qatar Central Bank s required minimum ratio of 10%, with the capital adequacy ratio at 17.9% as at 30 September 2011 compared with 18.5% at the end of On 17 January 2011 the Bank received the third and final subscription from Qatar Investment Authority on behalf of Qatar Holding ( QH ), its subsidiary, and at an Extraordinary General Assembly of the Bank held on 21 February 2011 shareholders gave approval to issue 20,620,530 new ordinary shares to QH, increasing its shareholding in Commercialbank to 16.7%. Andrew Stevens, Commercialbank s Group Chief Executive Officer, said, Commercialbank s nine months results demonstrate ongoing delivery on our strategy. We have continued to grow our loan book achieving a 24% increase in 2011 compared with the end of last year. Market credit demand in both the Public and Private Sectors has increased during the third quarter and we have been able to further the development of our Corporate and Retail businesses, a testament to the strength of our market positioning. The strategic outsourcing partnership has progressed well during the third quarter and we are starting to see improved efficiency and customer service. The alliance banks are focussed on expanding their own domestic franchises and have delivered continued positive quarterly trends in revenue, lending and net profit. We will continue to build on the progress that we have made in the year, identifying opportunities to grow our business and deepen our presence in our domestic market whilst maintaining focus on balance sheet management, asset quality and risk management. 3

4 Associates Commercialbank s associates have contributed QR 149 million to the Bank s performance in the nine months ended 30 September 2011 compared with QR 111 million for the same period in National Bank of Oman ( NBO ) has delivered improved profitability, higher operating income and growth in lending in NBO s net profit after tax of RO 27.3 million for the nine months ended 30 September 2011 was up 26% compared with RO 21.7 million in Net operating income grew by 15% to RO 69.7 million year-on-year from RO 60.4 million in 2010 with net interest income increasing by RO 2.7 million to RO 44.6 million and non-interest income growing by RO 6.6 million to RO 25.1 million. Net provisions for lending were RO 2.6 million lower at RO 4.4 million in NBO s loans and advances to customers grew by 16% to RO 1.59 billion at 30 September 2011 from RO 1.36 billion at 31 December 2010 whilst deposits grew by 17% to RO 1.55 billion. United Arab Bank ( UAB ) recorded an increase in profitability, improved operating income and a 40% growth in lending in the first nine months of UAB s net profit was up 4% to AED 225 million for the nine months ended 30 September 2011 compared with the net profit of AED 216 million achieved in Net operating income increased by 16% to AED 416 million in 2011 from AED 357 million in the nine months ended 30 September 2010 due to growth of 19% to AED 299 million in net interest income and higher fee and commission income. UAB grew its loans and advances to customers by 40% to AED 7.6 billion at 30 September 2011 from AED 5.4 billion at the end of September UAB s operating expenses were up by 9% to AED 134 million from AED 123 million in 2010 due, mainly, to investment in new branches; UAB has opened 4 new branches in the last twelve months. Provision for credit losses increased to AED 57 million in 2011 compared with AED 17 million in the same period in 2010 reflecting, primarily, the impact of the new UAE Central Bank provisioning guidelines. - END - 4

5 For more information please contact: Faith Newnham Manager, Investor Relations Commercialbank Tel: Hugh Barker Senior Vice President F T I Consulting Tel: Hugh.Barker@fticonsulting.com Notes to Editors About Commercialbank Commercialbank has total assets of QR 70.4 billion as at 30 September As a full service commercial bank, the Bank offers a full range of corporate, retail, Islamic, and investment banking services as well as owning and operating exclusive Diners Club franchises in Qatar and Oman. The Bank s countrywide network includes 34 full service branches and 148 ATMs. Profitable in every year since incorporation in 1975, continual investment in technology and human capital, together with a strong capital base and underwriting capability, provides a solid foundation for continued growth. A successful diversification strategy has expanded Commercialbank s GCC footprint through strategic partnerships with associated banks, the National Bank of Oman (NBO) in Oman and United Arab Bank (UAB) in the UAE. NBO, the second largest bank in Oman with total assets of RO 2.1 billion as at 30 September 2011, has 69 branches in Oman, 3 branches in Egypt and 1 in Abu Dhabi. UAB is headquartered in Sharjah, with total assets of AED 9.7 billion as at 30 September 2011 and operates 14 branches in the UAE. Commercialbank enjoys strong credit ratings of (A) from Fitch, (A1) from Moody s and (A-) from Standard & Poor s. The Bank is listed on the Qatar Exchange and was the first Qatari bank to list its Global Depository Receipts (GDRs) as well as bonds on the London Stock Exchange. Additionally, Commercialbank s Swiss Franc bond issuance in December 2010, listed on the SIX Swiss Exchange, is the first public bond issuance by a Qatari bank in Switzerland. The Bank is dedicated to supporting Qatar s community and social infrastructure through various CSR programmes and sponsorship of events such as the Commercialbank Qatar Masters Golf Tournament. 5