The Commercial Bank (CBQK) Q2 2024 earnings summary

Executive summary

• Net profit for H1 2024 reached QAR 1,571 million, up 1.1% year-on-year (reported) and 16.2% (restated), driven by lower costs, reduced provisions, and improved associate performance.

• Operating profit rose to QAR 1,922 million, a 0.6% increase year-on-year.

• Cost-to-income ratio improved to 22.9% from 29.1% in H1 2023, mainly due to lower LTIP costs.

• CET1, Tier 1, and total capital ratios improved to 12.3%, 15.8%, and 17.2% respectively.

• A non-cash net monetary loss of QAR 80.4 million was recorded due to hyperinflation accounting at Alternatif Bank.

Financial highlights

• Net interest income was QAR 1,867 million, down 3.5% year-on-year due to higher funding costs; non-interest income fell 17.7% to QAR 626 million, mainly from reduced FX and trading income.

• Operating expenses dropped 27.2% year-on-year (reported), mainly due to lower LTIP costs; excluding LTIP, expenses rose 2.1%.

• Net provisions decreased 25.8% to QAR 427 million, reflecting higher recoveries and ECL release.

• Group loans and advances grew 3.4% to QAR 92.1 billion; customer deposits rose 1.4% to QAR 77.2 billion.

• Retail portfolio grew 14.1% to QAR 12.2 billion, now 13.3% of the loan book; retail fee revenues up 15% year-on-year.

Outlook and guidance

• Full-year loan growth guidance remains at 3%, with potential upside due to economic stimulus and government projects.

• NIM expected to be maintained at 2.7% for the rest of 2024, with measures in place to protect margins.

• Cost of risk guidance for 2024 is 120-135 basis points, with current net cost of risk at 64 basis points.

• Capital adequacy ratio guidance of 17% already achieved, with further upside possible.

• Management remains focused on executing the five-year strategic plan, emphasizing digital innovation and client experience.