Al Khaliji (KCBK) reported net profit of QR109m for the first quarter ended March 31. Loans and advances grew by 11% during the quarter, to reach QR22.9bn, and net interest income increased by 12%. The acceleration in sustainable recurring revenues is in line with the bank’s strategy to progressively rely less on investment gains for future growth in favor of increased proceeds from a growing banking franchise.
“Al Khaliji is starting the year with a solid financial performance supported by a growing banking franchise. Following the Group’s strong performance in 2013 it was expected that investment returns would be more muted this year given the developments in quantitative easing and US treasury rates. Protecting the net margin, by adopting a prudent hedging strategy for our fixed income revenue streams, and growing our franchise with quality assets remains amongst our primary objectives. In conjunction with the introduction of our new IT system we will continue to streamline our processes and procedures, aiming to deliver a leaner organization and lasting long-term operational cost savings. We are pleased that our capital strength supports our plans for continued balance sheet initiatives focused on quality earnings,” said Rob McCall, Group Chief Executive Officer, Al Khaliji.
The Group’s CEO, Rob McCall, states that the financials are firmly in line with expectations. This quarter Al Khaliji has delivered on two key objectives as it invested in an increased physical presence and a new enhanced IT system to deliver on future growth plans consistent with its medium term plan. The Group CEO is satisfied with the strong momentum in which the bank continues to build its franchise across all business lines and captures market share in its chosen segments. The bank has stepped up financing of large infrastructural projects and its private sector preferred customers to drive an increase in its lending book, up 63% year-on-year, while preserving superior asset quality as reflected in a low NPL ratio. Al Khaliji’s investment portfolio now accounts for 37% of total assets in contrast to the end of March last year when it made up half of the bank’s assets.
Al Khaliji France S.A.’s net profit reached QR16.3m, up 5% compared to Q1 2013 and represents 15% of the Group net income.
Income Statement highlights
Net Profit for the first quarter of this year is QR109.2m compared to QR131.5m for the same period in 2013.
Net interest income increased by 12%, to QR165.9m, over the prior quarter. Net fee and commission income of QR37.8m grew by 11% on Q4 2013; however it is QR9.4m lower year-on-year owing to non-recurring revenues. This reduction flows through on a first quarter comparative basis to Net Operating Income which is QR213.8m.
Income from the banking franchise now accounts for 92% of profits, compared to 81% last year, reflecting a growing book with less reliance on investment income which made up 19% in Q1 2013.
Balance Sheet highlights
Total assets reached QR43.7bn in the first quarter of 2014, up 27% from Q1 2013 and up 6% from the previous quarter ending December 2013.
Al khaliji France S.A.’s represented 10% of the group’s total assets.
Loans and advances rose to QR22.9bn, 63% higher than the same period end of the prior year and 11% higher than the previous quarter.
Deposits reached QR21.7bn, up 25% compared to the first quarter of 2013 and up 9% from the fourth quarter of 2013.
Earnings per share and capitalization
Earnings per share were QR0.30 for the first three months of this year. The bank’s capital adequacy ratio was 17.7% as per Basel III.
Non-performing loans stood at QR62.4m at the end of March 2014, down 11% from end of December 2013. The NPL ratio, at 0.27%, continues to improve quarter-on-quarter.
His Excellency Sheikh Hamad Bin Faisal Bin Thani Al Thani, Chairman and Managing Director concluded: “Al Khaliji continues to expand its banking franchise in a manner that is capable of delivering long term value to its shareholders and customers. The financial strength of the organization and our commitment to deliver on our identified strategic initiatives ensures we are well positioned to deliver on future business growth”.
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