(The Group’s Comment) Commercial Bank Net Profit Up 175.5% to QR1.66 Billion in 2018

Ø  Profit: Commercial Bank's profits amounted to QR 1,663.2 million in 2018, compared to QR603.7 million in 2017. The bank’s earnings per share reached QR3.52, versus QR0.91 in 2017. The adjusted net profit after interest paid to the owners of the first tranche stood at QR 1,423.2 million, compared to QR363.65 million for 2017. Profits improved by a decrease in the size of the provisioned expenditure from profit for 2018 bad debts of loans and advances to QR769.0 million, compared to the previous year.

 

Ø  Comprehensive income: The total comprehensive income of 2018 amounted to QR 1,238.9 million. The statement of comprehensive income recorded a loss of QR424.3 million from foreign currency translation differences for the year 2018.

 

Ø  Assets: The assets amounted to QR135.070 million by the end of 2018, compared to QR138.449 million the previous year of 2017, a decrease of 2.44%. This drop was due to a decrease of 8.13% in loans and advances to customers. Loans and advances constitute 62.00% of the total assets of the bank as of the end of 2018.

 

Ø  Quality of assets: Non-performing loans reached about QR4.89 million in 2018, a total of 5.59% in loans and advances, compared to QR5.27 million in 2017 and 5.65% in loans and advances. The ratio of non-performing loans stood at 78.7% in 2018, compared to 81.0% in the previous year.

 

Ø  Shareholders' Equity: It reached about QR 15,999 million in 2018, down 6.0% compared to the previous year. The decrease was due to the Bank's implementation of Standard No. 9, which led to a decrease in the risk reserve by about QR1.00 billion in 2018. Commercial Bank’s share book value amounted to QR39.53 and return on equity reached 8.90%.

 

Ø  Revenues: Net interest decreased by 1.40% to reach QR 2,482.3 million by the end of 2018, compared to QR 2,518.3 million in 2017. This decrease is due to higher interest expense (cost of deposits) than the increase in interest income, which climbed by 36.0% between 2017 and 2018.

 

Q1

Q2

Q3

Q4

Total

Net Interest Income

659.23

669.21

579.96

573.92

2482.32

Net Profit

404.69

450.36

404.56

403.56

1663.17

 

Ø  Dividends: Commercial Bank’s Board of Directors recommended the General Assembly to distribute 15.0% (3.62% dividend yield) of the nominal value of capital as cash dividends for the year 2018, compared to 10.0% in 2017.

 

The stock is currently traded at a PE multiple of 11.76 times, and a book value multiple of 1.05 times.