The Commercial Bank (P.S.Q.C.) Announces. Net profit of QAR Million for the Full Year Ended 31 December 2016

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1 The Commercial Bank (P.S.Q.C.) Announces Net profit of QAR Million for the Full Year Ended 31 December Feb 2017, Doha, Qatar: The Commercial Bank (P.S.Q.C.) ( the Bank ), its subsidiaries and associates ( Group ) announced today its financial results for the full year ended 31 December The Group reported a net profit of QAR million as compared to QAR 1,434 million for the same period in 2015, a decrease of 65%. The Bank reported a net profit of QAR 683 million (2015- QAR 1,280m) a decrease of 46.6% compared to the same period in The Board of Directors is recommending, for approval at the Annual General Assembly on 4 April 2017, a bonus share payout of 5% (i.e. issue of one bonus share for every twenty shares held). The financial results and bonus distribution are subject to the approval of the Qatar Central Bank. Key financial highlights for the Group (and the Bank in parenthesis) compared to the same period in 2015: Operating profit of QAR 1,942 million, down by 14% (QAR 1,810 million, down by 9.1%) Net operating income of QAR 3,594 million, down by 9% (QAR 3,057 million, down by 4.9%) Provisions on non-performing accounts at QAR 1,394 million, up by 55% (QAR 1,127 million, up by 59%) Net profit of QAR million, down by 65% (QAR 683 million, down by 46.6%) Total assets of QAR billion, up by 5.6% (QAR million, up by 7.3%) Customer loans and advances of QAR 77.8 billion, up by 1.6% to (QAR 65.9 billion, up by 3.4%) Customers deposits of QAR 70.9 billion up by 1.6% (QAR 62.8 billion, stable)

2 Earnings per share of QAR 0.86 His Excellency Sheikh Abdullah bin Ali bin Jabor Al Thani, Chairman of the Board of Directors of Commercial Bank, said, 2016 was marked by challenging economic conditions and volatile markets exacerbated by international political uncertainty. To address these conditions, we have created a clear five year strategic plan which focuses on building sustainable growth. Under the new executive leadership, the Board is confident in Commercial Bank s ability to return to growth as this plan is implemented Financial Performance Mr. Hussain Al Fardan, Commercial Bank s Vice Chairman and Managing Director, added, Commercial Bank reported an operating profit of QAR 1,942 million for the full year However, provisions and impairments of QAR 1,394 million were taken as part of our Strategic Plan to prudently provision and de-risk our balance sheet which has resulted in a net profit of QAR 501 million. Despite the impact of provisions, our underlying business remains robust and the recently developed five year strategic plan will reshape our business towards sustainable growth. Net operating income for the Group decreased by 9.0% to QAR 3,594 million for the full year ended 31 December 2016, down from QAR 3,949 million achieved in the same period in The Bank s net operating income decreased by 4.9% to QAR 3,057 million compared to the same period in Adjusting for a one off gain from sale of property in 2015 the Group s net operating income would be lower by 6.9% and the Bank s 2.1% compared to the same period in 2015.

3 Net interest income for the Group decreased by 7.6% to QAR 2,341 million for the full year ended 31 December 2016 compared to the same period in 2015, mainly due to an increase in the cost of deposits and a change in the business mix in ABank resulting in lower income. Net interest margin decreased to 2.2% as compared to 2.5% in the same period in The Bank s net interest income was lower marginally by 1.8% to QAR 1,994 million compared to the same period in Non-interest income for the Group decreased by 11.4% to QAR 1,253 million for the full year ended 31 December 2016 compared with QAR 1,415 million. The overall decrease in noninterest income was due to lower net fee and commission income, partly offset by higher foreign exchange income and investment income. The Bank s non- interest income decreased by 10.1% to QAR 1,062 million compared to the same period in Non interest income in 2015 included a one off gain on sale of a property, adjusting for this non-interest income for the Group would be lower by 5.4% and for the Bank by 2.7%, compared to the same period in Total operating expenses for Group decreased by 2.3% at QAR 1,652 million for the full year ended 31 December 2016 compared with QAR 1,691 million for the same period in The Bank s total operating expenses increased by 2.0% at QAR 1,247 million. The Group s net provisions for loans and advances increased by 50.6% to QAR 1,268 million for the full year ended 31 December 2016, from QAR 842 million for the same period in 2015 as we de risked assets. The non-performing loan (NPL) ratio has increased to 5.0% at 31 December 2016 compared with 4.2% at the end of December 2015, but the coverage ratio has increased to 78.9% as at 31 December 2016 compared to 71.2% as at 31 December The Bank s net provision for loans and advances increased by 60.6% to QAR 1,050 million compared to the same period in 2015.

4 Impairment provisions on the Group and Bank s investment portfolio increased to QAR 77 million for the full year ended 31 December 2016 compared with QAR 56 million for the same period in The Group delivered balance sheet growth of 5.6% at the end of December 2016 with total assets at QAR billion, compared to QAR billion at the end of December Total asset growth was driven mainly by an increase of QAR 3.5 billion in due from banks, QAR 1.2 billion from Loans and advances to customers and QAR 1.3 billion on revaluation of Property and equipment. The Bank s balance sheet grew by 7.3% with total assets of QAR billion, driven mainly by an increase of QAR 3.6 billion in due from banks, QAR 2.2 billion in Loans and advances to customers and QAR 1.3 billion on revaluation of Property and equipment. Group s loans and advances to customers increased by 1.6% to QAR 77.8 billion at 31 December 2016 compared with QAR 76.6 billion at the end of December The growth in lending has been generated, mainly in industry, commercial and services sectors. The Bank s loans and advances to customers grew at a higher rate of 3.4% to QAR 65.9 billion mainly in the sectors above. Group s investment securities decreased by 3.0% to QAR 15.4 billion as at 31 December 2016 compared with QAR 15.9 billion at the end of December The Bank s Investment securities decreased by 12.5% to QAR 13 billion compared to QAR 14.8 billion at the end of December The decrease is mainly in Treasury bills issued by the Qatar Central Bank. Group s customers deposits increased by 1.6% to QAR 70.9 billion at 31 December 2016, compared with QAR 69.8 billion as at 31 December The increase was primarily in ABank time deposits. The Bank s Customers deposit remained stable at QAR 62.8 billion.

5 Mr. Joseph Abraham, Commercial Bank s Chief Executive Officer, commented, On joining the Bank in July 2016, I was impressed with its strong brand and client franchise, since then we have developed, received Board approval and begun the implementation of the Bank s five year strategic plan. We have embarked on a transformation journey and have already started translating the strategic plan into tangible actions that will reshape our business, build sustainable earnings and achieve growth. As part of this plan, we have raised capital and initiated a process of prudent provisioning and de-risking of our loan portfolio through diversification by sector, geography and tenor whilst building momentum in our business earnings and driving increased productivity and efficiency. Across the five year plan, we will maintain a focus on building asset quality, diversification, client experience and digital innovation as key market differentiators for Commercial Bank. Our heritage of bringing to market leading technologies combined with our passion to see customers succeed drives us to provide the best client experience for our customers. Testament to our focus on the client experience and digital innovation is the Best Cash Management Bank in Qatar award we received at The Asian Banker Middle East & Africa Transaction Banking Awards in Our state-of-the art Corporate Internet Banking platform was recognized through the award for providing our corporate customers with a unique and rewarding user expeience to enhance their business needs. We launched another first to market digital product in 2016, the Enterprise Mobile Banking App for SMEs. The App is designed to support the growth of SMEs and offers competitive services to this important business segment. To support delivering on our strategy, Commercial Bank enhanced its capital through the issuance of QAR 2 billion Tier 1 Capital, completed in 2016, and the QAR 1.5 billion rights issue which was approved last year and completed in January The successful completion of these two transactions demonstrates the confidence investors have in the Bank. Commercial Bank through its subsidiary in Turkey and associates in the UAE and Oman has established a regional alliance. To strengthen our regional alliance, in 2016 we consolidated

6 our position in Turkey through the acquisition of the remaining 25% of ABank, which will allow for closer integration and alignment of risk management and business strategy. As a result of the challenging Turkish economy and fall of the Turkish lira, ABank has reported a net profit of TL 2.1 million (QAR 2.6 million) and is continuing to re-position its business. Our associate bank in Oman, National Bank of Oman (NBO), reported a net profit of OMR 56 million (QAR 527m), supported by an increase in customer deposits as well as customer loans and advances. Our associate bank in the UAE, United Arab Bank (UAB) continued to re-align its business and de-risk its book and as a result reported a net loss of AED 523 million (QAR 518 million). Subsidiary in Turkey Alternatifbank ( ABank ) delivered a net profit of TL 2.1 million (QAR 2.6 million) for the full year ended 31 December 2016 (TL 96 million profit for 2015). Net operating income decreased by TL 99 million to TL 480 million (QAR 580 million) for the full year ended 31 December 2016, from TL 579 million (QAR 779 million) in 2015, mainly due to a decrease in net interest income. As at 31 December 2016, ABank had increased its customer lending by 11.9% to TL 11.3 billion (QAR 12.2 billion) from TL 10.1 billion (QAR 13 billion) in December Customers deposits increased by 43% to TL 8.1 billion (QAR 8.3 billion) compared to TL 5.6 billion (QAR 7.1 billion) in December Associates National Bank of Oman National Bank of Oman ( NBO ) net profit decreased by 7% to OMR 56 million (QAR 527 million) for the full year ended 31 December 2016 as compared to OMR 60 million (QAR 568 million) in the same period. Net operating income increased by OMR 0.4 million (QAR 3.7 million) to OMR million (QAR 1,287 million), from OMR million (QAR 1,283 million) in same period in 2015, mainly due to an increase in net interest income which increased by 7% to OMR 98 million (QAR 927 million). As at 31 December 2016, NBO increased

7 its customer lending by 5.4% to OMR 2.7 billion (QAR 25.2 billion) and customers deposits increased by 6.6% to OMR 2.4 billion (QAR 22.6 billion) compared to United Arab Bank United Arab Bank ( UAB ) results decreased by 215% to a net loss of AED 523 million (QAR 518 million) for the full year ended 31 December 2016 over the same period in The operating income for the full year ended 31 December 2016 decreased by 29% to AED 861 million (QAR 853 million), from AED 1,213 million (QAR 1,202 million) in Net Interest Income decreased by 36%, Non-Interest Income increased by 0.9%, as compared to the same period in UAB s loans and advances decreased by 15% to AED 13.3 billion (QAR 13.2 billion) as at 31 December 2016, while customers deposits decreased by 7% to AED 15.5 billion (QAR 15.4 billion) compared to 31 December END

8 For more information please contact: Mona Abdallah EGM, Chief Marketing Officer Commercial Bank Tel: Jon Earl Managing Director F T I Consulting Tel: +971 (0) jon.earl@fticonsulting.com Notes to Editors About Commercial Bank Commercial Bank has total assets of QAR billion as at 31 Dec 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 181 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 3.5 billion as at 31 Dec 2016, has 60 conventional branches and 6 Islamic branches in Oman and 1 branch each in Egypt, Abu Dhabi and Dubai. UAB is headquartered in Sharjah, with total assets of AED 21.3 billion as at 31 Dec 2016, and operates 22 branches across the emirates in the UAE. Building on the successful execution of the Bank s expansion strategy to date, Commercial Bank acquired a majority stake in Alternatifbank in Turkey in 2013 and became a 100% owner through put option exercised on 19 December Commercial Bank enjoys strong credit ratings of (A2) from Moody s, (A+) from Fitch, and (BBB+) 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) 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 and June 2016 are listed on the Irish Stock Exchange.

9 Commercial Bank was awarded SME Bank of the Year for 2016 by The Asian Banker based on its wide-ranging achievements over the past three years, specialised team and customer focused products and services for SMEs. Commercial Bank also won the Best Contact Centre award at The Gulf Customer Experience Awards 2015 for outstanding customer service. In recognition of its CSR activities benefitting the Qatari community, Commercial Bank was awarded the Best CSR Report, at the Corporate Social Responsibility awards ceremony for organisations in Qatar. The Bank won Best Cash Management Bank in Qatar award at The Asian Banker Middle East & Africa Transaction Banking Awards in 2016 and the Best Investor Relations award for mid-cap companies at the Qatar Stock Exchange s annual IR awards ceremony in 2017 recognising best practice in Investor Relations. 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 reflects the Bank s promotion of excellence in sports and its keen interest in enhancing Qatar s international sporting reputation. About Alternatifbank (ABank) ABank was established in 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. In December 2016 the bank completed the put option exercise of purchasing 25% of share in Abank from Anadolu group. Currently the Bank owns 100% of ABank shares. ABank is a mid-size Turkish bank that predominately serves medium-sized companies through a country-wide network of 53 branches. ABank provides commercial/corporate banking services and products, with a special focus on the growing segment of Small and Medium- Sized Enterprises. ABank s main product ranges cover trade finance instruments, working capital finance, cash management, and portfolio management. 31 Dec 2016, ABank had total assets of TL 17.5 billion, total loans stood at TL 11.3 billion, customer deposits of TL 8.1 billion and shareholders equity of TL 1.3 billion.