The Commercial Bank (CBQK) Q1 2025 earnings summary

Executive summary

• Q1 2025 net profit after BEPS Pillar Two Tax was QAR 651.4 million, down 18.7% year-on-year, mainly due to a QAR 31.9 million loss from the Turkish subsidiary and a QAR 52.9 million tax charge.

• Net profit before Pillar 2 tax was QAR 704.3 million, down 12% year-on-year; excluding Turkish losses and LTIP impact, profit before tax would have been up 2%.

• Total assets grew 1.7% to QAR 169.1 billion, with loans and advances up 5.8% to QAR 94.9 billion.

• Customer deposits declined 3.8% to QAR 76.4 billion, while low-cost deposits increased 5.7%.

• First in Qatar to offer 24/7 USD cross-border transfers, marking a digital innovation milestone.

Financial highlights

• Operating income declined 9.5% year-on-year, mainly due to lower net interest income; non-interest income rose 19.8% to QAR 349.4 million.

• Net interest margin was 2.2% for Q1 2025, with guidance to maintain 2.2%-2.3% for the year.

• Operating expenses increased year-on-year, driven by investments in people, digital innovation, and higher costs in Turkey; cost-to-income ratio rose to 31%.

• Net provisions fell to QAR 149.1 million, down 38% year-on-year, aided by higher recoveries.

• Loan coverage ratio at 85.4%, down from 107% in Q1 2024; NPL ratio at 5.9%, slightly improved from 6.0%.

Outlook and guidance

• Loan growth for 2025 expected at 2-3%, in line with GDP, despite a strong Q1 driven by government and public sector borrowing.

• NIM expected to remain between 2.2%-2.3% for 2025; cost/income ratio targeted below 26%.

• CET1 ratio guidance for 2025 is 12.5–13.0%, CAR 17.0–18.0%, NPL 5.5–6.2%.

• ROE guidance for 2025 is 10–11% post BEPS Pillar Two Tax impact.

• Turkish subsidiary expected to reach breakeven by year-end after restructuring.