The Commercial Bank (CBQK) Q3 2024 earnings summary

Executive summary

• Net profit for nine months ended 30 September 2024 reached QAR 2,341.2 million, up 2.8% year-over-year on a restated basis, but down 1% on a reported basis, mainly due to hyperinflationary impacts in Turkey.

• Total assets increased 2.2% to QAR 163.2 billion, with customer deposits up 3.8% and loans down 0.5% due to government and public sector repayments.

• Capital adequacy ratio improved to 17.8%, CET1 at 13%, and total equity grew 11.2% to QAR 26.4 billion.

• MSCI ESG rating upgraded to “A”; recognized for digital innovation and mobile banking excellence.

• Retail business showed strong growth, especially in wealth, brokerage, and mortgages, while wholesale loan growth declined 1% due to government repayments.

Financial highlights

• Net interest income for 9M 2024 was QAR 2,748 million, down 4.5% year-over-year; net interest margin stable at 2.7%.

• Fee and other income dropped 26% year-over-year, mainly due to lower FX and trading income in Turkey.

• Operating expenses fell 14% year-over-year, largely due to lower LTIP costs; cost-to-income ratio improved to 25.2% from 26.1%.

• Net provisions decreased 25.8% to QAR 535 million for the nine months, aided by higher recoveries and ECL release.

• Return on average equity was 12.3%; return on average assets held steady at 1.9%.

Outlook and guidance

• 2024 guidance for capital ratios and risk management remains intact, with CAR at 17.8% and CET1 at 13%.

• Cost of risk expected between 120-135 basis points for 2024, with higher provisions likely in Q4.

• Net interest margin guidance is 2.6%-2.7%, with slight downward pressure expected if rates fall.

• Loan growth expected to be modest, with selective participation in government and private sector opportunities.

• Focus on responsible banking, sustainable financing, and further ESG improvements.