Commercial Bank Group posted a first quarter net profit of QR801.6mn, up 6.7% on a reported basis and 38.9% on a restated basis in Q1, 2023.

The group's balance sheet increased by 2% (as at March 31, 2024) with total assets at QR166.2bn compared with QR163bn in March 2023.

Commercial Bank Group’s loans and advances to customers decreased 4.7% to QR89.7bn in Q1, 2024 compared to QR94.1bn 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% to QR79.4bn (as on March 31) compared with QR76.1bn in the same period in 2023. This is largely due to increase in time deposits by customers.

“We have 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,” Commercial Bank said yesterday.

The Group’s cost-to-income ratio improved to 19% from 34% during the first quarter of the year.

In the first quarter, the bank recorded strong capital adequacy ratio (at 16.4%), while return on average assets (ROAA) improved to 1.9% from 1.4%.

Commercial Bank Group chairman Sheikh Abdullah bin Ali bin Jabor al-Thani 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.

“Building on our 2023 accolades for innovation, Commercial Bank was designated by Edaa as the first bank in Qatar to manage the dividends distribution for listed companies in line with the National Vision of providing services by digital means, and we reaffirm our dedication to bringing technology to contribute to Qatar’s digital future.”

Commercial Bank vice-chairman Hussain Ibrahim Alfardan 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 $750mn 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.

“Looking ahead, we remain committed to solidifying Commercial Bank's position as a leading banking institution in the region. We look forward to another year filled with significant milestones, all aimed at supporting the growth and prosperity of Qatar's economy."

Commercial Bank Group chief executive officer Joseph Abraham 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%, to reach QR957.7mn, down from QR987mn 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%.

“The overall fees and other income decreased by 4.2% to QR291.7mn, compared to QR304.4mn in Q1, 2023. This was mainly driven by reduced FX and trading income.

“The Group’s cost-to-income ratio improved to 19% during the period on the account of improved operating expenses, compared to 34% 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 were down by 12.1% to QR240.5mn compared to QR273.5mn in Q1, 2023.

“The gross cost of risk decreased by five 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%, reaching QR28.1bn, down from QR29.8bn in Q1, 2023.

“Customer deposits increased by 4.3% during the period, at QR79.4bn, whilst net loans and advances to customers fell by 4.7%, to QR89.7bn from QR94.1bn 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 QR29.6bn, compared to QR30.1bn in the previous year.

“The Group remains in adherence to the International Accounting Standards (IAS) 29, which require the application of hyperinflationary accounting for Alternatif Bank. As a result, a non-cash "net monetary loss" of QR40.6mn was recorded in the Group's income statement for the period as compared to QR42.1mn in the corresponding period in 2023.”

Forbes has ranked Commercial Bank among the ‘Top 30 Most Valuable Banks in the Middle East’ for 2024.