Slides
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The Commercial Bank (P.S.Q.C.) Financial Results For the year ended 31 December 2024
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Forward Looking Statements • This presentation and subsequent discussion may contain certain forward-looking statements with respect to certain plans and current goals and expectations of Commercial Bank and its associated companies relating to their future financial condition and performance. These forward-looking statements do not relate only to historical or current facts but also represent Commercial Bank’s expectations and beliefs concerning future events. By their nature forward-looking statements involve known and unknown risks and uncertainty because they relate to future events and circumstances including a number of factors which are beyond Commercial Bank’s control. As a result, Commercial Bank’s actual future results or performance may differ materially from the plans, goals and expectations expressed or implied in such statements. • Any forward-looking statements made by or on behalf of Commercial Bank speak only as of the date they are made. Commercial Bank does not undertake to update forward-looking statements to reflect any changes in Commercial Bank’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. 2
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➢ ECONOMY AND FIVE-YEAR PLAN TARGETS ➢ CONSOLIDATED HIGHLIGHTS AND PERFORMANCE ➢ SUBSIDIARY PERFORMANCE 3
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Qatar’s Positive Outlook Qatar Outlook economy well positioned for 2025 and beyond Source: World Economic Outlook October 2024 - IMF, World Bank – Qatar MPO, Qatar News Agency, Reuters • Qatar continues to be one of the world’s largest LNG exporter. In 2024, the largest exporters of LNG were USA, followed by Qatar and then by Australia. • Economic activity continues to be supported by investments in the North Field gas expansion, new infrastructure projects, and robust growth across logistics, manufacturing, tourism and trade. • The North Field gas expansion plans to increase Qatar’s LNG output to 110 million tonnes per annum (mtpa) by 2025 and thereafter to 126 mtpa by 2027. A further expansion plan was unveiled to boost the LNG output to 142 mtpa by 2030. • Qatar laid foundation on $6 billion Ras Laffan petrochemical project, Middle East's largest ethane cracker and capacity to produce 2.1 million mt/year of ethylene, to begin production in 2026. • Qatar is set to become the world’s largest exporter of urea by ramping up production from a current 6 mtpa to 12.4 mtpa by 2030. • Qatar announced launch of Simaisma project worth QR 20 billion ($5.5 billion). The project will span over 8 million square meters, featuring a 7 km waterfront that stretches over Qatar’s eastern coastline. • Qatar’s GDP growth is projected at ≈2 percent in 2025, aligning with the near-term economic goals outlined in Qatar National Vision 2030, the country is also pursuing long-term strategies to diversify its economy and ensure sustainable development. • Qatar's 2024 budget reported an approx. surplus of QR 4.7 billion for the first nine months of the year. • Qatar’s budget for 2025 provides substantial financial support to strategic sectors, including trade and industry, research and innovation, tourism, digital transformation, and information technology. • Qatar launched Third National Development Strategy (NDS3) which outlines a set of ambitious targets, including an average economic growth of 4%, the attraction of US$100 billion in foreign direct investment and leadership in business and digital competitiveness by 2030. • Qatar has launched the Qatar National Manufacturing Strategy 2024-2030, which includes 15 key initiatives encompassing 60 projects to support strategic industries such as aluminium, plastics, advanced food, medicine, chemicals and others. The strategy aims for a 3.1% CAGR in the manufacturing sector by 2030. • Qatar aims to elevate its non-hydrocarbon sector’s contribution to GDP with a CAGR of 3.4% by 2030. • Fitch Ratings has upgraded Qatar's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'AA' from 'AA-’, with Stable outlook. • Moody's had raised the country's credit rating from (Aa3) to (Aa2) with a stable outlook, while Standard & Poor's affirmed the country's credit rating at (AA) with a stable outlook. • Qatar had announced additional infrastructure projects worth QR70 billion ($19.2 billion) in late 2023. 4
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Our progress to date and next five-year plan targets Strategic Intent 2016 Actual 5 Year 2021 Targets 2021 Actual 5 Year 2026 Targets 2024 Guidance 2024 Actual 2025 Guidance Capital Ratio CET1 : CAR : 9.7% 15.2% 11.0% - 11.5% 16.0% - 16.5% 11.7% 18.1% 13.0% - 14.0% 18.5% - 19.0% 11.5% - 12.0% 16.5% - 17.0% 12.3% 17.2% 13.0% - 13.5% 17.5% - 18.5% Risk Management NPL : CoR : 5.0% 164 bps 4.0% - 4.5% 50 bps 4.7% 111 bps 2.5% 60 - 80 bps 5.4% - 5.9% 120 - 135 bps 6.2% 36 bps (Gross 102 bps) 5.5% - 6.0% 80 - 100 bps (Gross 115 - 130 bps) Reshape loan book Gov/public sector : Real estate : 10% 28% 16% 20% 18% 19% 25% 16% 18% - 20% 18% - 20% 17% 22% 18% - 20% 18% - 20% Cost to Income Ratio(1) Consolidated : Domestic : 45.7% 40.2% 35% 30% 24.1% 20.5% < 20% < 17% < 26% < 21% 29.1%(1) 23.4%(1) < 26% < 23% Return on Equity (ROE)(2)(4) ROE : (3)ROE : 2.7% - 10% - 10.0% 12.7% 13% - 15% 16% - 18% 12.5% - 13.0% 16.0% - 17.0% 11.9% 15.4% 12% - 13% 16% - 17% (1) The cost to income ratio for FY 2024 is presented excluding performance scheme impact to show actual underlying business trend (2) Total average equity (annualized) (3) Excluding Additional Tier 1 (AT1) (4) The 2025 guidance at this stage reflects ROE without BEPS Pillar II impact 5
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➢ ECONOMY AND FIVE YEAR PLAN TARGETS ➢ CONSOLIDATED HIGHLIGHTS AND PERFORMANCE ➢ SUBSIDIARY PERFORMANCE 6
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Executive Summary Results Capital & Funding Reshaping Loan Book Costs Subsidiary & Associates Strategic Focus Progress Provisioning • Net profit of QAR 3,032.1 million, up by 0.7% compared to 2023. • Turkey reported a loss of QAR 85.2 million in 2024 after hyperinflationary accounting. • Total assets of QAR 165.8 billion, up by 0.9% from December 2023. • Loans and advances to customers remained stable at QAR 91.5 billion. • Customer deposits of QAR 77.0 billion, up by 0.6% from December 2023. • Strong capital adequacy ratio at 17.2% (post adjusting for proposed dividends). • Total equity of QAR 26.5 billion, up by 8.5% from December 2023. • S&P affirmed Commercial Bank’s rating at A-/Stable/A-2. • Awarded with the prestigious “Best Green Financing Initiative” award and “Sustainable and Green Bank of the Year in Qatar” award from the Asian Banker. • CET1, Tier 1 and Total Capital Ratios at 12.3%, 15.7% & 17.2% respectively, as compared to 10.6%, 14.1% and 14.9% at December 2023. • Successful issuance of US Dollar denominated international bond of a total size USD 750 million. • Successful issuance of largest ever Green CHF-denominated bond from Qatar raising total of CHF 225 million at a coupon rate of 1.7075%. • Consolidated loan book stood at QAR 91.5 billion as at 31 December 2024, remaining stable compared to the position as at 31 December 2023. • Focus remains on re-shaping the profile of the lending book. • Continued diversification of risk across a range of sectors including focus on increasing exposure to government and public sector. • Non-performing loan (NPL) ratio at 6.2% at 31 December 2024 compared with 5.9% at 31 December 2023. • Loan coverage ratio (including ECL) stood at 82.2% as at 31 December 2024. • Net cost of risk decreased to 36 bps compared to 105 bps in 2023 due to strong recoveries. Gross cost of risk decreased to 102 bps in 2024 from 144 bps in 2023. • Consolidated cost to income ratio reached 27.9% in 2024 from 26.2% in 2023, mainly on account of lower operating income driven by Alternatif Bank and the Bank’s continued investment in technology to enhance operational infrastructure and service propositions to support business growth. • In Qatar, cost to income ratio reached to 23.9% in 2024 from 22.5% in 2023. • Alternatif Bank reported net loss of TL 790.9 million (QAR 85.2 million) in 2024 compared to a net profit of TL 467.5 million (QAR 83.6 million) in 2023. The results were impacted by the hyperinflation accounting amounted to TL 1,178.2 million (QAR 131.8 million) in 2024 and TL 2,349.0 million (QAR 335.0 million) in 2023. • Associates strong execution of their strategic plan resulted in solid profit share in 2024. 7
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(1) Excluding LTIP table shows the figure after removing the impact of share option scheme, to show actual underlying business trend. (2) Includes ECL (3) Net loans and advances to customers (4) Deposit volumes include current and call deposits, saving deposits, time deposits and accrued interest Reported Excluding LTIP (1) FY 2024 FY 2023 Variance FY 2024 v FY 2023 (%) FY 2024 FY 2023 Variance FY 2024 v FY 2023 (%) Net Operating Income 4,556 5,489 (17.0%) 4,620 5,559 (16.9%) Costs (1,273) (1,441) 11.6% (1,342) (1,354) 0.9% Operating Profit 3,283 4,049 (18.9%) 3,278 4,205 (22.1%) Net Provisions(2) (467) (917) 49.1% (467) (917) 49.1% Share of Associates’ Results 330 294 12.1% 330 294 12.1% Net Monetary Loss due to Hyperinflation (132) (335) 60.7% (132) (335) 60.7% Tax 18 (80) 122.9% 18 (80) 122.9% Net Profit 3,032 3,010 0.7% 3,027 3,166 (4.4%) Lending Volume(3) 91,480 91,490 (0.0%) 91,480 91,490 (0.0%) Deposit Volume(4) 77,007 76,541 0.6% 77,007 76,541 0.6% Net Interest Margin (NIM) 2.4% 2.8% (0.4%) 2.4% 2.8% (0.4%) Cost/Income Ratio (Consolidated) 27.9% 26.2% (1.7%) 29.1% 24.4% (4.7%) Cost/Income (Domestic) 23.9% 22.5% (1.4%) 23.4% 20.9% (2.5%) Cost of Risk - COR (bps) – gross 102 144 42 102 144 42 Cost of Risk - COR (bps) – net 36 105 69 36 105 69 Non-Performing Loan (NPL) Ratio 6.2% 5.9% (0.3%) 6.2% 5.9% (0.3%) Loan Coverage Ratio(2) 82.2% 105.1% (22.9%) 82.2% 105.1% (22.9%) Common Equity Tier 1 (CET 1) Ratio 12.3% 10.6% 1.7% 12.3% 10.6% 1.7% Capital Adequacy Ratio (CAR) 17.2% 14.9% 2.3% 17.2% 14.9% 2.3% Financial Progress 8
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Movement in Loans and Advances • The loans and advances to customers remained stable during the year. • We continue to focus and grow the Retail book which improved by 11.4%. • In addition, at Alternatif Bank, the lending's have improved by 8.9%. 9 Key Movements 31 December 2024 (QAR m) 31 December 2023 (QAR m) Movement Dec 24 vs Dec 23 (QAR m) Movement Dec 24 vs Dec 23 (%) Corporate & International 74,857 76,471 (1,614) -2.1% Retail 11,950 10,727 1,223 11.4% Alternatif Bank Net Lending 4,672 4,292 381 8.9% Net Loans and Advances to customers 91,480 91,490 (10) 0.0%
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Group Profitability Consolidated Balance Sheet Performance Ratios Capital Group Financial Performance – Reported year ended 31 December 2024 QAR Million H1 2023 H1 2022 %Var. Total assets 160,823 176,393 -8.8% Loans and advances 89,392 101,240 -11.7% Investment Securities 29,429 29,359 0.2% Customer Deposits 76,105 89,331 -14.8% Total Equity 24,409 24,341 0.3% FY 2024 FY 2023 Return on Average Equity (ROAE)(1)(3) 11.9% 12.3% Return on Average Assets (ROAA) 1.8% 1.8% NIM 2.4% 2.8% QAR Million Dec-24 Dec-23 % Total assets 165,813 164,376 0.9% Loans and advances 91,480 91,490 0.0% Investment securities 33,229 30,762 8.0% Customer deposits 77,007 76,541 0.6% Total equity 26,489 24,406 8.5% QAR Million Dec-24 Dec-23 RWA (QAR million)(2) 131,092 121,274 CET 1 ratio (Basel III) 12.3% 10.6% Total capital ratio (Basel III) 17.2% 14.9% QAR Million FY 2024 FY 2023 % Net interest income 3,317 3,867 -14.2% Non-interest income 1,239 1,622 -23.6% Total costs (1,273) (1,441) 11.6% Net provisions (467) (917) 49.1% Share of associates’ results 330 294 12.1% Non-cash net monetary loss (132) (335) 60.7% Tax 18 (80) 122.9% Net profit after tax 3,032 3,010 0.7% (1) Including AT1 (2) Calculated in accordance with Qatar Central Bank (QCB) regulations (3) Total average equity (annualized) 10
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Corporate • Best Trade Finance Service (2019 – 23) from Global Finance • Best Bank for Corporate Banking in Qatar from Euromoney (2022) • Best Integrated Corporate Banking Site from Global Finance (2022) • Market Leader in Qatar in Corporate Banking from Euromoney Digital Rankings (2022) • Best Leading Corporate for Investor Relations in Qatar from MEIRA Annual Conference & Awards (2022) • The Most Innovative Mobile Trading App award in Qatar by International Finance (2023) • The Fastest Growing Brokerage House award in Qatar by International Finance (2023) • The Best Digital Bank for Trade Finance Services award in Qatar by Global Finance (2023) • The Best Corporate Mobile Banking App award in the Middle East by Global Finance (2023) • The Best Card Payment Service POS/ATM award in Qatar by International Finance (2024) • Sustainable and Green Bank of the Year in Qatar from the Asian Banker (2024) • Best Green Financing Initiative from the Asian Banker (2024) Retail • Best in Social Media Marketing and Services from Global Finance (2021-22) • Best Online Deposit, Card and Investment Product Offerings from Global Finance (2022) • Best User Experience (UX) Design from Global Finance (2022) • Best Open Banking APIs from Global Finance (2022) • Market Leader in Qatar in Digitals Solutions from Euromoney Digital Rankings (2022) • Best Mobile Banking App from International Finance (2023) • The Best Consumer Mobile Banking App award in Qatar by Global Finance (2023) • Best Mobile Banking App and Best Remittance Service award in the Middle East by MEED (2024) • Fastest Growing Credit Card Issuer award in Qatar by International Finance (2024) • Best Mobile Banking App and Best Mobile Banking in Qatar award from Global Finance (2024) Innovation • The Most Outstanding Innovation in Fraud Detection award in the world from Global Finance (2022) • Most Innovate Mobile Trading App from International Finance (2021-2022) • Best Bank in Qatar from Global Finance (2019, 2021-22) • Best in Social Media Engagement in the Middle East from The Asian Banker (2021) • Bank of the Year in Qatar from The Banker (2022) • Best Customer Service Initiative from International Finance (2023) • Most Innovative Mobile Banking App in the world from Global Finance (2023) • The Most Innovative Bank award in the Middle East by World Finance (2023) • Best Remittance Service award in the Middle East by MEED (2024) • Best Digital Bank in the Middle East by World Finance (2024) Leader in Digital Innovation Driving Customer Experience and Cost Benefits 11
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2.4% 2.7% 2.7% 2.8% 2.4% 2020 2021 2022 2023 2024 Profitability Net interest margin Operating Profit (QAR million) Net interest income as a % of average interest earning assets, including (i) Loans and advances to customers (ii) bonds and (iii) loans to other credit institutions (iv) other interest earning assets ◆ Net interest income for the period was QAR 3,317.2 million. ◆ Net interest margin at 2.4% for FY 2024. ◆ The drop in NIM was mainly driven by higher cost of funding and one-off interest in suspense adjustment. Excluding the one- off impact, the adjusted NIM would have been 2.6% for FY 2024. ◆ Non-interest income for the period was QAR 1,238.8 million ◆ The overall decrease in non-interest income was mainly due to reduced FX and trading income. Earnings Performance – Year ended 31 December 2024 3,141 3,621 4,156 4,049 3,283 2020 2021 2022 2023 2024 12
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25.9% 29.0% 21.5% 26.2% 27.9% 2020 2021 2022 2023 2024 Operating Efficiency Cost to Income Ratio Consolidated Cost to Income Ratio Domestic ◆ Cost to income ratio increased to 27.9% in FY 2024 from 26.2% in FY 2023. ◆ The increase in the ratio is mainly on account of significantly lower operating income from Turkey as well as one-off interest income adjustment in CB parent. ◆ In Qatar, cost to income ratio increased to 23.9% in FY 2024 from 22.5% in FY 2023. ◆ The Bank continues to focus on digital processes, technology along with tight expense management. Cost to income ratio increased due to lower operating income from Turkey as well as Bank’s continued investment in digital innovation and service proposition 21.9% 26.0% 19.1% 22.5% 23.9% 2020 2021 2022 2023 2024 13
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Summary Retail book breakdown by division – December 2024 Key retail income drivers Portfolio ◆ The retail portfolio improved by 11.4% to QAR 12.0 billion, representing 13.1% of overall bank’s loan book. ◆ The increase is supported by growth in personal loans, vehicle loans, mortgage loans and balances from cards. ◆ Qatari acquisition doubled over the same period last year and remains a key focus area for 2025, within overall customer acquisition strategy. Performance ◆ Retail operating income for FY 2024 has grown up to 40% of CB revenues. ◆ Retail fee revenues for FY 2024 are up 14% y-o-y leveraging on cards, wealth sales, remittance fx, brokerage fees and insurance products. Retail portfolio and performance on the rise, delivering strong growth Mortgage loans 32% Personal loans 40% Vehicle loans 4% Credit cards 12% Enterprise loans 2% Others 9% Net interest income 43% Net fee and commission 32% CBFS operation 4% Enterprise 21% Notes: (1) Others include overdrafts, term, trade and margin related loans (2) Retail loans above excludes Enterprise (1) (2) 14
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Consumption, 13% Real Estate, 14% Services, 21% Commercial, 14% Contracting, 3% Gov. & Semi- Gov. Agencies, 29% Other, 0% Industry, 1% Outside Qatar, 5% ◆ Loans and advances to customers remained stable at QAR 91.5 billion. ◆ Focus continues on diversifying loans and improving market share in Government and Public sector. Summary Loan book split - December 2024 Qatari banks credit facilities breakdown by sector – November 2024 Loan book breakdown by sector – December 2024 Source: QCB Loan book structure Wholesale* 82% Retail 13% Alternatif Bank 5% Acceptances 1% Enterprise 0.3% *Others include non-banking financial institutions Sector Mar-24 Dec-23 Dec-22 Dec-16 Govt and Public Sector 14% 15% 15% 10% Industry 7% 7% 8% 7% Commercial 17% 17% 17% 12% Services 27% 26% 28% 18% Contracting 3% 3% 4% 10% Real Estate 21% 21% 21% 28% Consumption 10% 9% 5% 12% Others* 2% 2% 2% 3% 100% 100% 100% 100% 15 *Wholesale includes Corporate and international loans as well as government and public sector loans including MoF overdraft Sector Dec-24 Dec-23 Govt and Public Sector 17% 15% Industry 7% 7% Commercial 16% 17% Services 23% 26% Contracting 2% 3% Real Estate 22% 21% Consumption 11% 9% Others* 2% 2% 100% 100%
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Summary ◆ Net provision charge for loans and NPLs of QAR 330.4 million vs QAR 990.7 million in FY 2023. ◆ QAR 218.5 million for Corporate ◆ QAR 175.6 million for Retail ◆ QAR 63.7 million provision reversal for Alternatif Bank ◆ NPL ratio stood at 6.2% as at 31 December 2024 from 5.9% as at 31 December 2023. ◆ Net Cost of Risk decreased to 36 bps in FY 2024 Vs 105 bps in FY 2023. ◆ Loan coverage stood at 82.2% in December 2024. ◆ Risk reserve maintained at 2.5% of total loans and advances in addition to credit impairment losses and interest in suspense. Risk reserve stands at QAR 2.3 billion as at 31 December 2024. 66.5% 62.5% 70.9% 70.4% 52.8% 35.1% 34.9% 34.5% 34.7% 29.4% 2020 2021 2022 2023 2024 Provision coverage ECL coverage 1,146 1,069 944 968 1,105 546 591 845 480 400 2,635 3,126 3,257 4,204 4,372 4.3% 4.7% 4.9% 5.9% 6.2% 2020 2021 2022 2023 2024 Retail UHNW SME Corporate Gross NPLs / Gross Loans Loan coverage ratio Non-performing loan (‘NPL’) ratio (90 day basis) Asset Quality – 31 December 2024: Continued Prudent Approach on Provisioning Net Provision Charge for Loans and NPLs (QAR million) 836 1,099 988 991 330 1.36% 1.29% 1.43% 1.44% 1.02% 0.95% 1.11% 1.21% 1.05% 0.36% 2020 2021 2022 2023 2024 Cost of Risk (%) - gross Cost of Risk (%) - net 16
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46% 16% 13% 21% 4% Customers' Deposits Total Shareholders' Equity Due to Banks and Financial Institutions Debt Securities & Other borrowings Other Liabilities Summary Total funding mix – 31 December 2024 Debt issued and other borrowed funds Commercial Bank credit ratings ◆ Customers’ deposits at QAR 77.0 billion, up by 0.6% vs December 2023 representing 46.4% of the total balance sheet. ◆ Well diversified funding mix ◆ Total equity represents 16.0% of funding mix. Funding : Continue to build up diverse sources of funding Rating Agency Credit ratings Bank Strength Outlook Date LT ST Moody’s A2 P-1 ba1 Stable Jun 24 Fitch A F1 bb+ Stable Jun 24 S&P A- A-2 bbb- Stable Nov 24 Issuance Type (QAR m) Dec-24 Dec-23 EMTN 9,339 6,948 Senior Notes 31 48 Subordinated Notes - 731 Other loans(1) 26,095 26,439 Total 35,465 34,166 (1) Other loans includes CP, Bilateral loans, Syndicated loans and Other related loans 17
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Corporate, 20% Individuals, 25% Non Resident, 19% Gov. & Semi- Gov. Agencies, 36% 2020 2021 2022 2023 2024 Time Deposits Savings Deposits Current & Call Deposits Summary Customer deposits (QAR million) Qatari banks deposits breakdown by sector – November 2024 Deposits by customer type – December 2024 ◆ Diversified deposit mix with Government and Semi-Government at 31%, corporate at 23% and individuals at 31%. ◆ Current and Savings accounts deposit composition at 41% of the deposit base (compared to 35% in 2023). ◆ The mix of Qatar non-resident deposit is 15%. Source: QCB Well diversified deposit portfolio 75,790 Corporate 23% Individuals 31% Non resident 15% Gov. & Semi- Gov. Agencies 31% 61% 63% 63% 8% 7% 7% 31% 30% 30% 81,958 83,167 61% 76,541 65% 7% 34% 77,007 7% 31% 7% 28% 59% 18
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25,778 26,723 29,835 30,762 33,229 17% 16% 18% 19% 20% 2020 2021 2022 2023 2024 Investment securities % of Total Assets Summary Investment portfolio – 31 Dec 24 vs 31 Dec 23 Investment portfolio evolution (QAR million) ◆ Investment portfolio at QAR 33.2 billion at December 2024, compared to QAR 30.8 billion at December 2023. ◆ Investments in highly rated Sovereign Bonds provides stability to the portfolio and makes it less volatile. ◆ 73.6% Government Bonds. ◆ 85.5% AAA+ to A- rated securities. Investment Portfolio – 31 December 2024: High asset quality with 73.6% of the portfolio invested in HQLA Government Bonds Investment portfolio by credit rating Credit Rating Portfolio Weight AAA+ to A- 85.5% BBB+ to BB- 3.7% B+ to B- 1.2% Unrated 9.6% December 2024 December 2023 Equities 4.0% Government Bonds 73.6% Investment Funds 0.1% Other debt sec 22.4% Equities 3.6% Government Bonds 73.0% Investment Funds 0.1% Other debt sec 23.4% 19
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0.20 0.10 0.16 0.25 0.25 0.30 2019 2020 2021 2022 2023 2024 Summary Total Equity (QAR million) Dividend distribution per share (QAR) Capital Adequacy Ratio (Basel III) Capitalization Levels – 31 December 2024 12.2% 11.7% 11.6% 10.6% 12.3% 15.7% 16.0% 15.6% 14.1% 15.7% 17.8% 18.1% 17.3% 14.9% 17.2% 2020 2021 2022 2023 2024 CET1 Tier1 Total Capital ratioMin ratios : CET1: 9.0% Tier1: 11.0% Total Capital Ratio: 14.4% ◆ During the year, movement in Capital Adequacy Ratio (CAR) is as follows: ◆ The directors have declared dividend of QAR 0.30 per share for approval at AGM. 63% 64% 18% 18% 18%19% 59% 24% 17% 61% 23% 16% 60% 24% 17% 17% 24% 60% 2020 2021 2022 2023 2024 Reserves AT1 Equity 23,139 24,171 24,406 22,170 64% 57% 18% 25% 17%18% 59% 24% 17% 15% 22% 63% 26,489 60% 24% 17% CAR as at 31 December 2023 14.9% Movements: Increase due to capitalisation of YE 2023 profits, YE 2024 profits less pay outs 1.1% Others includes increase in reserve balances 1.2% CAR as at 31 December 2024 17.2% 20
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Profitability Balance Sheet Performance Ratios Capital Commercial Bank Financial Performance – Year ended 31 December 2024 (CB Domestic) QAR Million Dec-24 Dec-23 Var % Total assets 160,098 158,393 1.2% Loans and advances 86,808 87,199 -0.4% Investment securities 34,490 30,678 12.4% Customer deposits 73,228 73,550 -0.4% Total equity 28,571 25,363 12.7% FY 2024 FY 2023 ROAA 1.6% 1.7% NIM 2.3% 2.7% Cost to income 23.9% 22.5% QAR Million Reported Excluding LTIP FY 2024 FY 2023 % FY 2024 FY 2023 % Net interest income 2,989 3,528 -15.3% 2,989 3,528 -15.3% Non-interest income 992 1,220 -18.7% 1,375 1,177 16.8% Operating income 3,981 4,748 -16.2% 4,364 4,706 -7.3% Total costs (953) (1,069) 10.8% (1,023) (982) -4.2% Operating profit 3,028 3,680 -17.7% 3,341 3,724 -10.3% Net provisions (530) (886) 40.3% (530) (886) 40.3% Net profit 2,496 2,791 -10.6% 2,809 2,835 -0.9% QAR Million Dec-24 Dec-23 RWA (QAR million) 122,076 110,241 CET 1 ratio (Basel III) 11.4% 10.6% Total Capital Ratio (Basel III) 15.7% 14.9% 21
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Commercial Bank’s ESG Achievements, Strategy, Governance and Reporting Selected ESG Highlights/ Achievements Formal sustainability governance & Reporting: Management-level Sustainability Committee with Board-level oversight ESG risk assessment criteria on lending and investment Remuneration linked to ESG Signatory to UN Global Compact Commercial Bank has launched its Sustainable Finance Framework in Dec 2023, which received a Second Party Opinion from Sustainalytics Board Remuneration, Nomination & Governance Committee (BRNGC) Management Sustainability Committee Reports to Governance and Reporting Structure • Provides oversight of sustainability strategy and performance • Reviews and recommends Annual Sustainability Reporting for Board approval • Reviews and recommends for approval of the BRNGC, the Bank’s sustainability strategy and commitments • Assesses the Bank’s sustainability related risks and opportunities • Recommends priority sustainability- related initiatives for implementation within the Bank • Monitors the Bank’s sustainability performance against the Bank’s sustainability strategy Sustainability Strategy is integrated with core principles, including Sustainable Finance, Financial Inclusion, SME Support, D&I, Environmental Impact of Operations Issued debut Green Bond (Swiss Franc) for CHF 225 Mn for 3 years at a coupon rate of 1.7075% following strong demand from a range of institutional investors. The issue was the largest ever CHF Green bond issued in Qatar, the largest CHF issuance out of Qatar since January 2013, and the largest CHF Green bond issued out of CEEMEA since 2021 MSCI ESG rating of ‘A’ (upgraded from ‘BBB’ in August 2024) 22
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Commercial Bank’s Sustainable Finance Framework (SFF) (1/2) Commercial Bank’s Sustainable Finance Framework is aligned with the International Capital Market Association (ICMA) Green Bond Principles (GBP) 2021, Social Bond Principles (SBP) 2023, and Sustainability Bond Guidelines (SBG) 2021 and Loan Market Association (LMA) Green Loan Principles (GLP) 2023 and Social Loan Principles (SLP) 2023 Use of Proceeds Project Evaluation & Selection Key Responsibilities of Commercial Bank’s Sustainable Finance Working Group • Convene at least twice each year • Ratify Eligible Sustainable Projects • Ensure that all Eligible Sustainable projects are thoroughly assessed per CB’ s ESG risk management policy ▪ CB’s ESG Risk Management scorecard segments customers into Low, Medium and High based on the Customer’s exposure to ESG impacts and risks • Regular monitoring of asset pool, replacing ineligible projects with eligible ones • Facilitate regular reporting and manage future updates of Framework • Ensure that the approval of Eligible Sustainable Projects will follow the Company’s existing approval processes Management of Proceeds • Proceeds will be deposited in Commercial Bank’s general funding accounts and earmarked for allocation towards the Eligible Sustainable Projects using the Sustainable Finance Register • Any proceeds temporarily unallocated will be invested according to the Bank’s standard liquidity policy in cash or cash equivalents, e.g., deposits with Central Bank or other government securities. Reporting • On an annual basis until full allocation, Commercial Bank will publish an allocation report and impact report • Commercial Bank intends to engage a third party reviewer to provide an annual assessment on the alignment of the allocation of funds with the Framework’s criteria Maximum 3-year look- back period 2 years look – forward period Renewable Energy Clean Transportation Green Buildings Energy Efficiency Sustainable Water and Wastewater Management Pollution Prevention and Control Employment Generation, and Programs Designed to Prevent and/or Alleviate Unemployment Stemming from Socio- economic Crises Food Security and Sustainable Food Systems Access to Essential Services (Healthcare and Education) Affordable Basic Infrastructure Eligible Green Categories Eligible Social Categories 23
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Commercial Bank’s Sustainability Finance Framework (SFF) (2/2) Commercial Bank’s Sustainable Finance Framework has a Second Party Opinion from Sustainalytics Credible and impactful and aligns with the four core components of GBP 2021, SBP 2023, SBG 2021, GLP 2023 and SLP 2023 ▪ Use of Proceeds – aligned with GBP / GLP ▪ Project Evaluation and Selection – in line with market practice ▪ Management of Proceeds - in line with market practice ▪ Reporting – aligned with market practice Alignment with the GBP, SBP, SBG, GLP and SLP Alignment with Commercial Bank’s Sustainability Strategy ▪ Framework is aligned with the Bank’s overall sustainability efforts and initiatives and will further its action on key environmental priorities ▪ Commercial Bank has adopted sufficient measures to identify, monitor and mitigate various risks associated with the proposed use of proceeds. Contribution to Sustainability: Expected Impacts ▪ The instruments issued under the Framework are expected to help advance the UN SDGs 2, 3, 4, 6, 7, 8, 11 and 12 ▪ Commercial Bank’s financing of district cooling in Qatar is expected to contribute to the country’s climate-related targets Second Party Opinion On a periodical basis, Commercial Bank will also engage a third- party reviewer to provide an assessment on the alignment of the allocation of funds with the Framework’s criteria to provide timely and transparent information. 24
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Commercial Bank’s Sustainable Finance Framework Categories Lookback period: 3 years Proceeds of each Issuance under this framework will be fully allocated within 2 years Lookback period: 3 years Proceeds of each Issuance under this framework will be fully allocated within 2 years Renewable Energy Production, transmission and storage of energy (and manufacture of dedicated components) from: Solar, Wind, Hydropower (power density > 5W/m2 or <100gCo2e/kWh), Bioenergy (<100gCO2e/kWh, sustainable or waste feedstock only), Green hydrogen Clean Transportation Acquisition, operation and maintenance of low carbon vehicles: ✓ Passenger and public transportation (under 50gCO2/p-km up to 2025, and 0gCO2/km thereafter) ✓ Freight transportation (under 25gCO2/t-km up till 2030, 21gCO2/tkm from 2030 up to 2050) Projects supporting the deployment of EVs including charging infrastructure Green Buildings Acquisition, development, construction and refurbishment of buildings that belong to the top 15% in terms of energy efficiency of their local market or are certified: LEED “Gold” or above and BREEAM “Excellent” or above, GSAS “3-4 stars” or above, Estidama “4 Pearl” or above Energy Efficiency Projects that reduce energy consumption by at least 20%, including: District cooling systems, Investment in smart energy grids, energy meters, energy management systems, smart cities and energy efficient equipment for buildings including LED lighting and HVAC Activities that result in lock in of fossil fuel technologies will be excluded Sustainable Water and Wastewater management • Water and wastewater treatment plants (WWTP) including reuse of WWTP effluents and Sewer and pumping stations • Water recycling and reuse projects, water saving systems, technologies and water metering • Water desalination projects running on reverse osmosis technology with a carbon intensity of less than 100gCO2e/kWh over the residual asset life Pollution Prevention and Control Projects related to construction, upgrades and renovation of facilities for collection, sorting, processing and conversion and treatment of waste Exclusion Criteria: Coal or gas fired power generation and distribution assets; Coal mining and transportation; Fossil fuel-related exploration and distribution; Conflict minerals; Extractive industries and mining; Military Contracting and Weapons ; Nuclear power generation and distribution asset; Activities involving modern slavery, or forced labour; Payday loans; Adult Entertainment Employment Generation, and programs designed to prevent and/or alleviate unemployment stemming from socioeconomic crises Financing and/or refinancing of loans to Micro, Small and Medium Enterprises (MSME) and microfinance clients impacted by external factors, with a consequently negative impact on employment generation or retention Target Populations: MSMEs affected by pandemics and natural disasters; and Female-owned MSMEs and female entrepreneurs Food Security Access to adequate food and meeting nutrition needs, including investment in infrastructure and facilities such as warehouses to provide adequate storage, improve food conservation or improve connectivity in the food chain to reduce food losses Increasing agricultural productivity and resilient agricultural practices that support smallholder farmers Target Population: General population Access to Essential Services Projects that expand access to public, not-for-profit, free or subsidised healthcare and education Target Population: General population, including those lacking access to essential services Affordable Basic Infrastructure Affordable basic infrastructure that provides / expands access to rural and urban needs for Clean drinking water; Sanitation including sewerage systems Target Population: General population Eligible Green Categories Eligible Social Categories *Full eligibility criteria is available in the Framework. Projects also align with Commercial Bank’s Risk Management approach which has a list of prohibited credits (e.g. in tobacco, alcohol and gambling sectors) and a list of restricted sectors and prohibited activities covering animal welfare, controversial weapons, fisheries and protected areas. 25
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➢ ECONOMY AND FIVE YEAR PLAN TARGETS ➢ CONSOLIDATED HIGHLIGHTS AND PERFORMANCE ➢ SUBSIDIARY PERFORMANCE 26
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◆ Operating income at TL 2,291m as of FY 2024 reflects a drop of 59%. ◆ Net provisions decreased by TL 663 m vs FY 2023. ◆ YoY Increase in OPEX at 22% well below yearly inflation (44.4%). ◆ The net monetary losses due to hyperinflation is TL 1.2 bn. ◆ FY 2024 Net Attributable Loss at TL 791 m. ◆ Positive effect of IAS 29 on equity is TL 3.1 bn up by 39% vs FY 2023. Alternatifbank Results – Year ended 31 December 2024 Alternatifbank of Turkey ProfitabilityBalance Sheet TL million Dec-24 Dec-23 YoY Assets Cash and Balances with Central Bank 12,151 9,900 23% Due from Banks 4,820 3,086 56% Loans and Advances 45,394 34,758 31% Investment Securities 18,779 16,521 14% All Other Assets 10,972 6,535 68% Total Assets 92,116 70,800 30% Liabilities & Equity Due to banks 12,553 6,037 108% Customer deposits 36,708 24,229 52% Other Borrowed Funds 28,739 28,852 0% Other Liabilities 2,880 3,592 -20% Shareholders Equity 11,236 8,090 39% Total Liabilities and Equity 92,116 70,800 30% TL million FY 2024 FY 2023 YoY Operating Income 2,291 5,580 -59% Operating Expense (2,654) (2,170) 22% Net Provisions 552 (111) -599% Profit Before Tax 189 3,300 -94% Income Tax Expense 198 (483) -141% Net Monetary Loss (1,178) (2,349) -50% Net (Loss) / Profit (791) 467 -269% 27
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