By Ed Attwood
Qatari private sector bank still sees its fourth-quarter profits rise by 33%.
Qatar’s Commercialbank saw full-year profits dip by 10 percent last year, as the company was hit by the global slump in the financial markets.
However, it finished 2009 strongly, posting 33 percent profits in the last quarter, as compared to the same quarter a year earlier, according to the firm’s full-year results.
The largest private sector bank in Qatar saw overall net profits throughout the year amount to $419m, while net operating income increased to $763m.
“2009 was a very challenging year for global financial markets but Commercialbank has delivered a resilient set of full year results despite the effects of the financial downturn,” said Abdullah Bin Khalifa Al Attiyah, the bank’s chairman.
“The excellency of our regional franchise has enabled Commercialbank to absorb the challenges of last year and also re-align the business so that it is better positioned to capture the potential value that recovering markets will offer.”
Commercialbank said its policy of improving yields on certain asset classes and the reduction of the cost of funds via diversification of funding sources had led to a 30 percent rise in net interest income.
However, the bank admitted that this gain had been largely offset by lower loan-fee related income as credit demand from the private sector sank.
Commercialbank added that cost-cutting had resulted in a 2.2 percent drop in operating expenses in 2009, and said this would continue to be a focus thus year.
Net provisions rose by 24 percent year-on-year, and a gradual improvement in global markets brought a 61 percent drop in impairment losses on the banks investment portfolio.
Commercialbank’s total assets dropped by 7 percent due to a reduction in interbank placements.
A reflection of the bank’s relatively strong position was the November 2009 issuance of $1bn of senior debt and $600m of subordinated debt to provide general liquidity. This global bond offer allowed Commercialbank to repay a $380m on-year loan and reduce its reliance on high-cost deposits.
“Throughout the course of the year, we have worked hard to manage the challenges that we faced. We took prudent decisions, made full provisions where required, managed the business conservatively but also took the opportunity to look to the future by re-shaping the business to ensure it is ready to extract full value from the recovery in regional markets,” said Commercialbank group CEO Andrew Stephens.
“Despite the challenges, we have improved returns across the business, with an increase in our net operating profit to QR2,778m. We have increased our net interest income by 30 percent and improved our net interest margin from 3.0 percent to 3.4 percent by proactively managing our balance sheet and in November we undertook a landmark $1.6bn global bond offer which was substantially oversubscribed.”