Al khalij Commercial Bank : KHIJI REPORTS A STRONG INCREASE OF 29% IN NET PROFIT FOR 2017

·Net profit of QAR 551 million, an increase of 29% year-on year

·Net Operating Income reached QAR 1,215 million, up 5% compared to 2016

·Operating expenses were QAR 335 million, 2% lower than the previous year

·The Capital Adequacy ratio at year-end stood at a healthy 16.7 %

Doha, January 24, 2018 : Al Khalij Commercial Bank (al khaliji) P.Q.S.C, in Qatar, released its consolidated financial statements for the year ended 31 December 2017 today with a Net Profit of QAR 551 million for 2017.

The consolidated financial statements for the year ended 31 December 2017 were approved by the Board of Directors of al khaliji during its meeting held in Doha on 24 January 2018. The figures are subject to Qatar Central Bank's approval and AGA endorsement.

His Excellency Sheikh Hamad Bin Faisal Bin Thani Al Thani, Chairman and Managing Director stated:

'al khaliji delivered a solid performance for the year with a notable increase in profits to QAR 551 million. Our multicultural and dynamic team of employees continues to operate in accordance with our values of integrity and service excellence and to act in the best interests of our customers. We remain steadfast in our vision to become 'the most highly rated and respected bank in Qatar' and to deliver sustainable performance for all of our stakeholders. The economic and fiscal strength of Qatar more than outweighs the challenges posed by the largely unexpected, political and trade events that prevail in the region. As such, we look forward to the future from a position of relative strength, confident we have strong fundamentals to ensure ongoing prosperity and success'

Commenting on the year's performance, Fahad Al Khalifa, al khaliji's Group Chief Executive Officer said:

'In 2017, al khaliji generated increased net profit of QAR 551 million, improved its margins, delivered greater cost efficiency and strengthened its capital and funding positions. Our full year results reflect our Qatar centric strategy and the continued strength of the local economy. Net Operating Income grew by 5% year-on-year driven primarily by an 8% increase in Net Interest Income. With our focus on margins, we divested non-core overseas assets whilst continuing to grow our domestic franchise in Qatar by supporting our clients across our Wholesale and Personal Banking business lines

We retain our focus on all risks including credit risk. With active remedial management, while maintaining a conservative approach to provisioning, we have managed to reduce credit impairments by 16% compared to 2016, while also improving our coverage ratio to 118%. The bank is well positioned for the introduction of IFRS 9 in line with QCB directives with effect from January 1, 2018.

The growth in operating income, coupled with our effective cost management resulting in an improved efficiency ratio of 27.6% for 2017 compared to 29.4% last year, and prudent management of our loan book, has resulted in a Net Profit of QAR 551m, an increase of 29% over 2016.

Our customer deposits at QAR 33bn are up 2% in the year leading to an improvement in our Loan to Deposit Ratio. Our Liquidity Coverage Ratio (LCR) remains well above the minimum levels required by the Qatar Central Bank. Our Balance Sheet remains strong and liquid with 26% of Total Assets comprising cash and high quality investment securities. Our Capital Adequacy Ratio remains robust at 16.7%.

Looking forward, al khaliji enters 2018 with a positive outlook. Qatar's economy is strong, with an excellent credit rating, high levels of foreign reserves and a robust fiscal policy. Our Qatar centric business model is resilient and our confidence is high. al khaliji will continue its drive to attract the best local talent, to boost Qatarization levels, and to be an employer of choice. We look forward to this year with renewed optimism, and will continue to support our clients by working closely with them and further strengthen our franchise in Qatar.'

Key highlights - 2017:

Income Statement

• Net Profit of QAR 551 million compared to QAR 427 million in 2016. Our Qatari operations continue to remain the main contributor

• Net operating income of QAR 1,215 million, an increase of 5% compared to last year

• Net Interest Income of QAR 984 million, an increase of 8% over 2016

• Impairment charges of QAR 319 million, 21% lower

• Earnings per share of QAR 1.38, up 29% compared to 2016.

Balance Sheet

• Total assets at QAR 57.9 billion, with a strong and liquid balance sheet

• Net loans and advances at QAR 35 billion, similar to 2016 as we divested non-core overseas assets

• Deposits at QAR 33 billion were up 2% compared to 2016, resulting in an improved Loan to Deposit ratio.

• Our liquidity position remains strong with 26% of our balance sheet comprising of cash and investment securities and our Liquidity Coverage Ratio (LCR) significantly higher than minimum regulatory requirements

Capitalization

The bank's capital adequacy ratio at year-end was 16.7% per Basel III.

Cash Dividend

After reviewing the audited financials today, the Board was satisfied with the 2017 financial performance and has recommended (subject to QCB approval) to the Annual General Assembly the distribution of a cash dividend of 7.5% of the nominal share value, i.e. QAR 0.75 per share.

His Excellency Sheikh Hamad Bin Faisal Bin Thani Al Thani concludes:

'We extend our deepest gratitude to the Government of Qatar and the Qatar Central Bank for their on-going support and invaluable role in guiding and assisting Qatari financial institutions and local business in their progress towards success.'

Balance Sheet indicators (QR million)	2017	2016	2017/2016(%)
Loans and advances to customers	35,094	35,180	0%
Investment securities	12,506	15,608	-20%
Total assets	57,885	60,597	-4%
Customers' deposits	32,683	32,195	2%
Total equity	7,292	7,033	4%

Income statement (QR million)	2017	2016	2017/2016(%)
Net operating income	1,215	1,160	5%
Net profit	550.5	426.6	29%
	2017	2016	2017/2016(%)
Earnings per share	1.38	1.07	29%

Group ratios	2017	2016
Efficiency (%)
Cost to Income	27.6	29.4
Liquidity (%)
Loans to Deposits	107	109
Loan Quality
Non-Performing loans (QAR million)	698.1	544.9
NPL ratio (%)	1.94	1.52
Capital Management (%)
Capital adequacy ratio (CAR)	16.7	15.8