In a clear reflection of its “strong” balance sheet and asset quality, Commercialbank posted a half-year net profit of QR1.017bn, up 6% on the same period in 2011.
The net profit earned by Qatar’s premier bank for the second quarter was QR546mn, 16% higher than the first quarter of 2012, and up 7% compared with the second quarter of 2011.
The bank’s total assets increased by 8% to QR73.3bn in June 2012 compared with QR67.7bn in June 2011 and were up QR1.8bn from December 2011.
The increase in total assets from 2011-end was driven by a growth of QR2.3bn in lending to customers and an increase in financial investments of QR1.1bn, partially offset by a reduction of QR2.6bn in balances due from banks and financial institutions.
Loans and advances to customers were up by 10% to QR43.9bn in H1, 2012 compared with QR39.8bn in June 2011 and were up by 6% from December 2011.
The growth in lending in 2012 has come from both the corporate and retail businesses. Financial investments increased to QR12.8bn in June, 1% higher than June 2011 and up 9% from 2011-end.
The increase since 2011-end reflects increased investment in Government bonds, Qatar Central Bank Treasury Bills and other fixed income securities.
Customers’ deposits stood at QR40.6bn in June 2012, an increase of 17% compared with H1, 2011, and up QR2.6bn since December 2011.
The increase in 2012 has been achieved despite a low level of growth in deposits across the banking sector, and is a testament to the strength of the bank’s customer relationships whilst positioning the bank to fund future growth in lending.
Net interest income grew by QR20mn to QR941mn in the first half of 2012 reflecting an increase in lending of 10%, which was partially offset by a reduction in net interest margin to 3.1% compared with 3.6% for the half-year that ended in June 2011. The reduction in margin was due to continued competitive pricing pressure and the regulatory changes in 2011, which capped pricing for many retail lending products.
Non-interest income was QR464mn in H1, 2012 compared with QR485mn for the same period in 2011 due, mainly, to a reduction this year in net fee and commission income levels.
The second quarter of 2012, however, saw a continuation in the improving quarterly trend for fee and commission income, which was up by QR17mn to QR193mn compared with the first quarter.
The bank’s net provisions for loans and advances were QR32mn in the first half of 2012, down 64% from QR88mn provided in the same period of 2011.
The second quarter of 2012 included the recovery of the provision taken in the previous two quarters for a single domestic, Islamic Banking Corporate account.
Asset quality remains strong with thenon-performing loan ratio improving to 0.82% in June compared with 1.2% in 2011-end.
On the first half’s financial performance Commercialbank chairman HE Abdullah bin Khalifa al-Attiyah said, “Qatar’s economy has grown steadily this year, led by the public sector expansion and underpinned by the increased level of spending announced recently in the Government’s 2012-2013 budget.
“While there has been a lower level of demand from the private sector, Commercialbank has successfully increased its lending in the first half of the year and will continue to look for opportunities to grow the business in the remainder of the year.”
Commercialbank managing director Hussain Alfardan said, “Commercialbank has delivered a positive performance in the first half of 2012 delivering strong profitability in a challenging operating environment.
“Our balance sheet and asset quality are strong and we are well positioned for continued growth in the second half of the year.”
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