2014 Year End Results

Commercial Bank of Qatar

Financial Results for the year ended 31 December 2014

Commercial Bank increases profit for the year by 20.9% to QAR 1,940 million

9 February 2015, Doha, Qatar: The Commercial Bank of Qatar Q.S.C. ("Commercial Bank" or "the Bank") and its subsidiaries and associates announced today its financial results for the year ended 31 December 2014. The Bank delivered a net profit of QAR 1,940 million for 2014, a 20.9% increase in profitability compared to 2013. On a quarterly basis, Commercial Bank generated net profit of QAR 387 million in the fourth quarter 2014, an increase of 29% compared to the fourth quarter 2013.

The Board of Directors is recommending, for approval at the Annual General Assembly on 18 March 2015, a combination of a cash dividend payout of QAR 3.5 per share and the issue of one bonus share for every ten shares held. The financial results and profit distribution are subject to the approval of the Qatar Central Bank.

Key financial highlights

· Net operating income up 13.6% to QAR 3,902 million

· Net profit up 20.9% to QAR 1,940 million

· Total assets up 2.3% to QAR 115.7 billion

· Customer loans and advances up 8.5% to QAR 72.5 billion

· Customers' deposits down 2.9% to QAR 61.6 billion

· Earnings per share of QAR 5.93

His Excellency Sheikh Abdullah Bin Ali Bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank said, "2014 marks the fortieth year since the incorporation of Commercial Bank as Qatar's first private commercial bank. In that time, the bank has grown to become the leading private commercial bank in Qatar, helping to build the nation in a period which has seen a huge transformation of Qatar's economy and society. We are proud of the role that Commercial Bank has played and will continue to play in supporting the growth of Qatar's diversified economy as part of Qatar's National Vision 2030. Our subsidiary in Turkey and our alliance partnerships in the UAE and Oman ensure our continued role in the wider region's growth. Commercial Bank's financial year has been strong as we have pursued the successful execution of our strategy to generate long-term value from across our franchise on behalf of our shareholders. We look forward to the next forty years of building success with our clients and partners." 

Financial Performance

Mr. Hussain Al Fardan, Commercial Bank's Vice Chairman and Managing Director, added, "2014 has been a positive year for Commercial Bank. Solid annual performances from Commercial Bank, our alliance banks, UAB and NBO, combined with a strong performance from our Turkish subsidiary, ABank, has meant that that Commercial Bank delivered net income of QAR 1.94 billion, a 20.9 % improvement compared to 2013."

Net operating income increased by 13.6% to QAR 3,902 million for the year ended 31 December 2014, up from QAR 3,434 million achieved in 2013. ABank delivered net operating income of QAR 849 million for the year ended 31 December 2014 which represents 21.8% of the total net operating income.

Net interest income was QAR 2,581 million for the year ended 31 December 2014, 17.9% higher than in 2013, reflecting strong growth in lending activities and the full year contribution and consolidation of ABank. ABank contributed QAR 638 million, 24.7% of the total net interest income. Net interest margin decreased marginally to 2.72% as compared to the third quarter of 2014 at 2.77%.

Non-interest income was up 6.1% to QAR 1,322 million for the year ended 31 December 2014 compared with QAR 1,246 million 2013 with ABank contributing QAR 211 million. The overall increase in non-interest income was due to higher net fee and commission income and was partially offset by lower income from investments securities and foreign exchange.

Total operating expenses were up 12.7% to QAR 1,620 million for the year ended 31 December 2014 compared with QAR 1,437 million in 2013. Excluding ABank, expenses were flat for the year ended 31 December 2014 compared to 2013.

The Bank's net provisions for loans and advances were QAR 623 million for the year ended 31 December 2014, up 3% from QAR 604 million provided in 2013. The non-performing loan ratio has increased to 3.79% at 31 December 2014 compared with 3.71% at the end of September 2014 and the coverage ratio has increased to 74.3% as at December 2014 compared to 68.3% in September 2014.

Impairment provisions on the Bank's investment portfolio reduced to QAR 50 million for the year ended 31 December 2014 compared with QAR 110 million in 2013.

Commercial Bank delivered balance sheet growth of 2.3% at the end December 2014 with total assets at QAR 115.7 billion, compared to QAR 113.1 billion at the end of December 2013. ABank contributed QAR 17.6 billion of assets for the period. Balance sheet growth was driven mainly by an increase of QAR 5.6 billion in lending to customers partly offset with a decrease of QAR 3.1 billion in financial investments.

Loans and advances to customers were up by 8.4 % to QAR 72.5 billion at 31 December 2014 compared with QAR 66.9 billion at the end of December 2013. The growth in lending since December 2013 has been generated, mainly, in the Government, Contracting, Services, Commercial and Retail Sectors. Loans and advances to customers of QAR 13.1 billion at ABank were included at 31 December 2014.

Investment securities were down by 21% to QAR 11.6 billion at 31 December 2014 compared with QAR 14.7 billion at the end of December 2013. The reduction in investment securities is mainly due to the maturity and sale of Government bonds. Investment securities of QAR 1.4 billion at ABank were included at 31 December 2014.

Customers' deposits reduced by 2.9% to QAR 61.6 billion at 31 December 2014, compared with QAR 63.4 billion as at 31 December 2013. The reduction in deposits was due mainly to a decrease in time deposits as the Bank received funds from the EMTN issuances in June and July 2014. Partially offsetting this decrease was an increase in demand and savings balances. This reflects our strategy to ensure continued diversification of our funding base and our focus on growing low cost funds.

Mr. Abdullah Saleh Al Raisi, Commercial Bank's Chief Executive Officer, said, "Commercial Bank's full year financial performance demonstrates the value of the re-focusing of our strategy undertaken earlier in the year. Across our franchise, we are driven by a returns based approach to our markets. We have made and continue to make the necessary investments across our assets in terms of leadership teams, operations and marketing to ensure Commercial Bank's continued innovative and client-focused service. All of our operations have generated good levels of profit momentum for the year with ABank delivering the stand-out performance for the year as the value of our strategy for our Turkish subsidiary is now flowing through to the bottom line. We have a solid platform from which to generate additional growth domestically and increasingly between our regional markets and we look forward to our prospects in 2015."

Subsidiary in Turkey

Alternatifbank ("ABank") delivered a 162 % increase in net profit to TL 139 million for the year ended 31 December 2014 (TL 53 million for 2013).

Net operating income grew by TL 48 million to TL 510 million for the year ended 31 December 2014, from TL 462 million in 2013, due mainly to an increase in net interest income and net fees and commission income. As at 31 December 2014, ABank had grown its customer lending by 21% to TL 8.4 billion and customers' deposits increased by 13% to TL 5.4 billion compared with 31 December 2013.

Associates in the UAE and Oman

National Bank of Oman and United Arab Bank have achieved a strong financial performance for the year ended 31 December 2014 with a 15% improvement in profitability as compared to 2013.

National Bank of Oman

National Bank of Oman ("NBO") achieved a net profit of OMR 50 million for the year ended 31 December 2014 as compared to OMR 41 million, an increase of 22% over 2013. Net operating income grew by OMR 10 million to OMR 114 million, from OMR 104 million in 2013, mainly due to an increase in net interest income which was up 8% to OMR 81 million. As at 31 December 2014, NBO grew its customer lending by 12% to OMR 2.3 billion and customers' deposits reduced marginally to OMR 2.2 billion compared to 2013.

United Arab Bank

United Arab Bank ("UAB") delivered a net profit of AED 605 million for the year ended 31 December 2014 which represents an increase of 9.6% over 2013.The net operating income for the year ended 31 December 2014 increased by 32% to AED 1,373 million, from AED 1,039 million in 2013 with solid underlying performance from both Net Interest Income and Non-Interest Income, up 27.6% and 46.1% respectively, as compared to 2013. UAB's loans and advances increased by 17.4% to AED 17.9 billion as at 31 December 2014, with customers' deposits at AED 18.7 billion, up 24.5% compared to 2013.

- END -

For more information please contact:

Ibrahim Al Emadi Jon Earl

Head of Corporate Communications Managing Director

Commercial Bank F T I Consulting

Tel: +974 4449 4748 Tel: +971 (0) 50 494 1178

Email: [email protected] Email: [email protected]

Notes to Editors

About Commercial Bank

Commercial Bank has total assets of QAR 115.7 billion as at 31 December 2014. As a full service commercial bank, the Bank offers a full range of corporate, retail and investment banking services as well as owning and operating exclusive Diners Club franchises in Qatar and Oman. The Bank's countrywide network includes 29 full service branches and 152 ATMs.

Profitable every year since incorporation in 1974, continual investment in technology and human capital, together with a strong capital base, provides a solid foundation for continued growth. A successful diversification strategy has expanded Commercial Bank's GCC footprint through strategic partnerships with associated banks, the National Bank of Oman (NBO) in Oman and United Arab Bank (UAB) in the UAE. NBO, the second largest bank in Oman with total assets of OMR 3 billion as at 31 December 2014, has 61 conventional branches and 4 Islamic branches in Oman and 1 branch each in Egypt, Abu Dhabi and Dubai. UAB is headquartered in Sharjah, with total assets of AED 25.7billion as at 31 December 2014, and operates 31 branches across the emirates in the UAE. Building on the successful execution of the Bank's expansion strategy to date, Commercial Bank completed the acquisition of a majority stake in Alternatifbank in Turkey in July 2013.

Commercial Bank enjoys strong credit ratings of (A) from Fitch, (A1) from Moody's and (A-) from Standard & Poor's. The Bank is listed on the Qatar Exchange and was the first Qatari bank to list its Global Depository Receipts (GDRs) as well as bonds on the London Stock Exchange. Commercial Bank's Swiss Franc bond issuance in December 2010, listed on the SIX Swiss Exchange, was the first public bond issuance by a Qatari bank in Switzerland. Commercial Bank's latest bond issuance in June 2014 is listed on the Irish stock exchange.

The Bank is dedicated to supporting Qatar's community and social infrastructure through Corporate Social Responsibility programmes and sponsorship of various events. Title sponsorship of the Commercial Bank Qatar Masters and the Grand Prix of Qatar Moto GP reflects the Bank's promotion of excellence in sports and its keen interest in enhancing Qatar's international sporting reputation. To reinforce Qatar's flourishing cultural environment, Commercial Bank is the strategic partner of the Katara Cultural Village. This collaboration symbolises the Bank's commitment to supporting cultural activities in Qatar and making the country a regional arts and cultural hub.

www.cbq.qa

About Alternatifbank (ABank)

ABank was established in 1991 and has been listed on the Istanbul Stock Exchange since 1995. Commercial Bank became the majority shareholder in ABank in 2013 holding a 74.24% stake, following the acquisition of ABank shares of 70.84% from the Anadolu Group and 3.40% through a public tender offer. Anadolu Group remains a significant shareholder retaining 25% of shares in ABank.

ABank is a mid-size Turkish bank that predominately serves medium-sized companies through a country-wide network of 73 branches in 27 cities. ABank provides commercial/corporate banking services and products, with a special focus on the growing segment of Small and Medium-Sized Enterprises. The Bank's main product ranges cover trade finance instruments, working capital finance, cash management, and portfolio management. The Bank has also recently made a strategic decision to re-enter Retail Banking, targeting the "mass affluent segment" in terms of customer profile with tailor made products.

At 31 December 2014, ABank had total assets of TL 11.2 billion, total loans stood at TL 8.3 billion, customer deposits of TL 5.4 billion and shareholders' equity of TL 967 million.

http://wwweng.abank.com.tr