A Game Changer
l e a d i n g t h e d i g i t a l b a n k i n g s c e n e
ANNUAL REPORT 2022
His Highness
Sheikh Tamim Bin Hamad Al Thani
Amir of the State of Qatar
His Highness
Sheikh Hamad Bin Khalifa Al Thani
Father Amir
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2022 had been a momentous year for Qatar,
which had the honor of hosting the FIFA World
Cup Qatar 2022™ that was a resounding
success by all means. It was also the first year
of Commercial Bank’s new five-year strategic
plan (2022 to 2026) underpinned by the same
5 Cs as before:
• Corporate Earnings Quality
• Client Experience
• Creativity & Innovation
• Culture
• Compliance
The Bank has performed well against
each of the 5 Cs and now is in a much
stronger position than when we started our
transformation journey in 2017. We have
achieved a significant uplift in our technology
through focused investments and innovation
to be an acknowledged Digital Leader and
Game Changer in Qatar.
A Game Changer
Leading the Digital Banking Scene
Commercial Bank has fully embraced digital
transformation due to the execution of our
strategy and commitment to excellence.
We have created a world-class, agile,
technological capability with the ability to
deliver digital, scalable and automated
innovations at speed.
We are strategically driven and will continue
to serve the market with convenient,
customer-friendly and secure banking
solutions. Our approach to innovation has
delivered truly client centric approaches:
increasing engagement through mobile
devices and technologies such as biometric
authentication; proactively creating a wide
array of digital products and services; and
enabling self-service and service on-demand
distribution channels.
ANNUAL REPORT 2022
5
About Commercial Bank
8
Business at a glance
11
Forward looking statements
14
Financial highlights
20
Key highlights
21
Chairman’s message
24
Board of Directors
26
Vice Chairman’s message
30
Group Chief Executive Officer’s message
32
Management review of operations
36
Annual Corporate Governance Report 2022
64
Independent Auditors’ Report
68
Consolidated Statement of Financial Position
73
Consolidated Statement of Income
74
Consolidated Statement of Comprehensive Income
75
Consolidated Statement of Changes in Equity
76
Consolidated Statement of Cash Flows
80
Notes to the Consolidated Financial Statements
82
Supplementary Information
183
Content
Scoring
High
We overcame the challenges,
scored global recognition and achieved the impossible.
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Incorporated in 1974 as the first private bank in
the country, Commercial Bank is today one of the
leading financial institutions in Qatar with a profitable
track record since inception. We continue to play
an important role in driving innovation and raising
service standards in banking across the region
through our investment in new technology, a clear
focus on customers and prudent management. Our
country-wide network includes 33 branches, 202
ATMs, 13 instant cheque book printing machines, 15
instant card printing machines, and we also own and
operate exclusive ‘Diners Club’ franchise in Qatar
and Turkey. We are listed on the Qatar Exchange
and were the first Qatari bank to list its Global
Depository Receipts on the London Stock Exchange.
Commercial Bank’s bonds issuance is listed on the
Irish Stock Exchange and the Swiss Exchange (SIX).
Expanding its geographical footprint, Commercial
Bank is 100% owner of Alternatif Bank in Turkey and
has strategic partnerships with the National Bank
of Oman (NBO) and United Arab Bank (UAB). These
strategic alliances enable Commercial Bank to offer
integrated services across the region, including
cross-border services for corporate banking
and capital markets, trade services for Corporate
Banking customers, private banking services and
syndicated loans in all our alliance markets.
Our continual investment in technology and people,
together with our strong capital base, provides a
solid foundation for further growth. Commercial
Bank has a robust financial position, with total assets
of QAR 169.1 billion as at 31 December 2022 and a
capital adequacy ratio of 17.3%. The Bank enjoys
strong credit ratings of A2 from Moody’s, A- from
Fitch, and A- from Standard & Poor’s.
True to our pioneering origins and history of
success, we are dedicated to supporting Qatar’s
economic development and social infrastructure
through Corporate Social Responsibility
programmes and sponsorship of various events,
which help to raise Qatar’s profile internationally.
Our business segments
Wholesale Banking Provides a range of
conventional commercial and investment banking
services and products to large, medium and small
enterprises, including corporate lending, trade
finance, syndicated loans, deposits, letter of credit
and guarantees.
Retail Banking Provides a full suite of conventional
retail banking services and products to retail
customers in Qatar, including current and deposit
accounts, wealth management, mortgage lending,
personal and vehicle loans and credit card and other
card services.
About Commercial Bank
ANNUAL REPORT 2022
9
Subsidiaries
Alternatif Bank A fully owned subsidiary in
Turkey that operates through a network of 33
branches .
Commercial Bank Financial Services (L.L.C.)
A fully owned subsidiary that provides direct
access to the Qatar Exchange, online trading and
brokerage services.
Orient 1 Limited A fully owned subsidiary
incorporated in Bermuda that owns an exclusive
‘Diners Club’ franchise in Turkey. (Inactive)
CBQ Finance Limited A fully owned subsidiary
incorporated in Bermuda and organised as
a special purpose entity established to raise
capital for Commercial Bank by issue of debt
instruments.
CB Global Trading Limited A fully owned
subsidiary incorporated in Cayman Islands, an
issuing vehicle for derivatives.
CB Global Limited A fully owned subsidiary,
incorporated in Cayman Islands, an issuing
vehicle for Euro Commercial Paper and
Certificate of Deposit Programme. (Under
Liquidation)
CB Innovation Services (L.L.C.) A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority providing the Bank with
operations management services.
CB Asset Management (L.L.C.) A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority established to provide
asset management services.
CB Real Estate Properties (L.L.C.) A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority providing the Bank with
advisory services in relation to property. (Inactive)
CB Leasing Company (L.L.C.) A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority that leases and subleases
properties in Qatar.
Associates and a Joint Venture
National Bank of Oman (S.A.O.G.) An associate
entity that operates through 59 conventional
branches and 6 Islamic branches in Oman, and one
branch each in Egypt, Abu Dhabi and Dubai.
United Arab Bank (P.J.S.C.) An associate entity
that operates through 6 conventional branches in
United Arab Emirates.
Massoun Insurance Services (L.L.C.) A joint
arrangement entity that provides tailored corporate
and personal insurance products to the Bank’s
customers.
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ANNUAL REPORT 2022
11
Our voyages
1974
Commercial Bank is incorporated as Qatar’s first
private sector bank
1975
The Bank begins operations under a management
services contract with Chase Manhattan Bank
1981
The contract with Chase Manhattan Bank officially ends
and Commercial Bank is fully independent
1987 A new Commercial Bank 1987 head office opens on
Grand Hamad Street
1990 ATMs are introduced in Qatar by Commercial Bank
1991
Commercial Bank acquires the Diners Club franchise
for Qatar
1992 Point-of-sale machines are introduced in Qatar by
Commercial Bank
1997 A dedicated Customer Call Centre is established
2005 Commercial Bank forms a strategic alliance with
National Bank of Oman
2006 Commercial Bank signs an agreement to become the
title sponsor for the Qatar Masters Golf Tournament
2008 First Qatari bank to list GDRs on the London Stock
Exchange
2009 Commercial Bank Plaza, the new headquarters of
Commercial Bank, is opened on 13 May 2009 by H E
Sheikh Hamad bin Jassim bin Jaber Al-Thani, Prime
Minister and Minister for Foreign Affairs of Qatar
2011
Incorporates Commercial Bank Investment Services
(re-branded to become Commercial Bank Financial
Services)
2013 Commercial Bank acquires 74.24% shareholding in
Alternatif Bank in Turkey
2015 Commercial Bank celebrates its 40th anniversary
milestone as Qatar’s first private bank
2016 Commercial Bank signs a debut USD 166 million 3-year
Ninja loan facility – the first Ninja loan for a GCC financial
institution Commercial Bank successfully completes
the acquisition of the remaining 25% shareholding in
Alternatif Bank
2017
Commercial Bank incorporates CB Innovation Services
LLC, a management operation services captive entity
that has successfully on-shored previously outsourced
activities.
2018 Commercial Bank receives ‘Best Bank in Qatar’ award
from Global Finance, ‘Best Remittance Service’ and
‘Best Cash Management Bank’ in the Middle East from
the Asian Banker.
2019 Commercial Bank embraces a new era of digitization
by launching ‘CB Fawri’, ‘CB Wallet’, and ‘SWIFT GPI’.
Commercial Bank successfully upgrades its Mobile App
and widens its digital infrastructure.
2020 Commercial Bank launches a number of digital firsts
such as CB Household Worker PayCard; CB Smart
Payroll; CB Pay; and CB Pay for Merchants. The Bank
also receives more than 12 prestigious awards from
international and regional awarding bodies and shines
in innovation and digital banking.
2021 Spearheading the digital innovation scene in the
country, and more particularly in the financial and
banking sector, Commercial Bank achieved the “Best
Bank” award in Qatar from two renowned awarding
bodies, Global Finance and Euromoney.
2022 During the year of the World Cup, Commercial Bank
wins the ‘Bank of the Year’ award from The Banker.
Business at a Glance
Game
Plan
Digital innovation mode is still on
and is a major part of our strategic plan through the 5C’s:
Corporate Earnings Quality
Client Experience
Creativity and Innovation
Culture
Compliance
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This document contains 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. By their nature forward-looking
statements involve risk 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 may
differ materially from the plans, goals and expectations set
forth in Commercial Bank’s forward-looking statements.
Net
Profit
Earnings
per Share
Loans and
Advances
Customer
Deposits
Total
Assets
QAR 2,811 million
QAR 0.62
QAR 98.0 bn
QAR 83.2 bn
QAR 169.1 bn
Any forward-looking statements made by or on behalf
of Commercial Bank are made in the context of the time
of publication of this report. Commercial Bank does not
undertake to update forward looking statements to reflect
any changes in Commercial Bank’s expectations with regard
to 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.
2,811
NET PROFIT (QAR MILLION)
Forward Looking Statements
ANNUAL REPORT 2022
15
Net Operating Income
Net Interest Income
78%
Net Fee Income
15%
Other Income
2%
Foreign Exchange
Income
8%
Investment &
Dividend Income
-3%
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Customer Deposits
49%
Other Borrowed Funds
16%
Due to Banks and
Financial Institutions
14%
Shareholders’ Equity
15%
Other Liabilities
6%
Funding Mix
ANNUAL REPORT 2022
17
Legal Reserve
38%
Share Capital
16%
Additional Tier 1 Note
23%
Risk Reserve
9%
Retained Earnings
18%
Other Reserves
-4%
Shareholders’ Equity
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Services*
28%
Real Estate
20%
Commercial
17%
Government
16%
Industry
8%
Personal
6%
Contracting
4%
Other
1%
*includes Non-banking financial institutions
Loans & Advances
ANNUAL REPORT 2022
19
Loans & Advances
58%
Investment Securities
18%
Other Assets
5%
Liquid Assets
17%
Investment in Associates
2%
Total Assets
cbq.qa
20
In QAR million, except per share amounts
and as stated otherwise
2022
2021
2020
2019
2018
Net interest income
4,106
3,702
3,100
2,963
2,482
Net operating income
5,294
5,101
4,237
4,347
3,509
Net profit
2,811
2,304
1,301
2,021
1,674
Total assets
169,121
165,464
153,606
147,536
134,928
Lending to customers
98,016
98,003
96,698
88,009
84,642
Basic/diluted earnings per share in QAR*
0.62
0.50
0.27
0.44
0.35
Dividends declared per ordinary share
including bonus shares in QAR*
0.25
0.16
0.10
0.20
0.15
Closing market price per ordinary share in
QAR (at year end)*
5.00
6.75
4.40
4.70
3.94
Book value per ordinary share in QAR*
6.31
5.95
5.48
5.38
4.91
Long-term debt (at year end)
26,656
31,005
27,233
21,568
24,451
Shareholders’ equity (at year end)
25,519
24,073
22,170
21,756
19,856
Return on average shareholders’ equity
11.3%
10.0%
5.9%
9.7%
8.2%
Return on average assets
1.7%
1.4%
0.9%
1.4%
1.2%
Capital adequacy ratio
17.3%
18.1%
17.8%
16.4%
15.5%
Full-time employees (at year end)
2,233
2,308
2,304
2,320
2,270
* 2018 restated to reflect share split from QAR 10 to QAR 1 as per QFMA regulations.
Financial Highlights
ANNUAL REPORT 2022
21
• Net profit of QAR 2,811.1 million, up by 22.0%.
• Normalized operating income of QAR 5,298.4
million, up by 11.0% (+3.8% on reported basis).
• Operating profit of QAR 4,155.9 million, up by
14.8%.
• Normalized cost to income ratio of 21.6%
(reported 21.5%), reduced from 24.1% (reported
29.0%).
• Strong capital adequacy ratio of 17.3%.
• Net provisions for loans and NPLs up by 7.3%
mainly on account of continued prudent
provisioning.
• Total assets of QAR 169.1 billion, up by 2.2%.
• Customer loans and advances remained flat at
QAR 98.0 billion.
• Customer deposits of QAR 83.2 billion, up by
1.5%.
• S&P upgraded Commercial Bank’s rating to A-
from BBB+.
• “Bank of The Year” in Qatar for 2022 by The
Banker Magazine.
• “Leading Corporate for Investor Relations”
award in Qatar by Middle East Investor Relations
Association.
22.0%
11.0%
NET PROFIT OF
QAR 2,811.1 MILLION,
UP BY 22.0%
NORMALIZED OPERATING INCOME OF
QAR 5,298.4 MILLION, UP BY 11.0%
(+3.8% on reported basis)
Key Highlights
A Game
Changer
Commercial Bank
has strategically driven the market for highly convenient,
customer-friendly, secure banking solutions.
cbq.qa
24
Chairman’s Message
On behalf of the Board of Directors, I am pleased to present
Commercial Bank’s Annual Report for the year ended on 31
December 2022.
2022 was an eventful year for the global economy
summarized by inflation, war and energy shocks. The
Russian invasion of Ukraine had significant ripple effects
in energy markets, especially in Europe and economies
were hit to different degrees by two interrelated shocks: an
increase in energy prices; and interest rate hikes as central
banks responded aggressively to historic rates of inflation.
After decades of rapid economic expansion, China’s growth
slowed down due to a troubled real estate sector and strict
zero Covid policy.
As a major hydrocarbon exporter, Qatar’s economy is
thankfully in a better position than many around the world.
Qatar’s investments in the North Field expansion project will
help to secure Qatar’s economic future as the world’s leading
LNG exporter, aligning with gas’ vital role in the world’s future
energy mix as a transition fuel with lower CO2 emissions than
coal or oil. In 2022, Qatar was the beneficiary of gas being
both in high demand and European countries looking to
source alternatives to Russian supply, reflected by increased
prices and Germany signing a 15 year deal to buy 2 million
tonnes of LNG from Qatar a year. Although Qatar’s rate of
inflation is not as high as seen in the US or Europe, Qatar’s
interest rates have risen in line with those of the US Federal
Reserve.
Abdulla Bin Ali Bin Jabor Al Thani
Chairman
ANNUAL REPORT 2022
25
Qatar is one of the strongest economies in the GCC and
The World Bank estimates that GDP will rise to 3.4% in
2022. Qatar’s fundamental strengths are its substantial
fiscal buffers and a low fiscal breakeven oil price. This has
been recognized by the major rating agencies and Qatar
has maintained strong sovereign ratings of Aa3, AA and AA-
from Moody’s, S&P and Fitch respectively.
2022 was a momentous year for Qatar when we welcomed
the world to Doha for the World Cup. This was undoubtedly
a success for Qatar and the country’s leadership delivered
the biggest sports event in the world to an exceptional
standard. The football and fans will be gone in 2023 but the
World Cup leaves a legacy of boosting Qatar’s international
credentials as an international destination for tourism,
commerce, sports and culture, which are vital components
of a sustainable economy. High energy prices in 2022,
particularly gas, has resulted in a budget surplus and helps
support Qatar’s economic growth and investment to further
develop the non-hydrocarbon economy.
On behalf of the Board of Directors, I would like to express
our thankfulness and gratitude for the visionary leadership
of His Highness the Amir Sheikh Tamim Bin Hamad Al
Thani. Under the leadership of His Highness, Qatar is well-
positioned to continue on its remarkable growth trajectory.
Commercial Bank is fully aligned with, and contributes
towards Qatar’s national development objectives. I also want
to convey our appreciation for the guidance and support we
have received from His Excellency the Prime Minister and
Minister of the Interior, His Excellency the Minister of Finance,
His Excellency the Minister of Commerce and Industry, and
His Excellency the Governor of Qatar Central Bank.
Commercial Bank’s vision is to be the leading bank in
Qatar with the world’s best client experience, innovation
in products and digital capability. We have made good
progress in achieving this vision as we come to the end of the
first year of our new strategic plan (2022-2026), reporting
record results for the year. Commercial Bank, its subsidiaries
and associates announced its financial results for the full year
ended on 31 December 2022, and the Board of Directors
has recommended, for approval at the Annual General
Assembly on 15 March 2023, a cash dividend payout of QAR
0.25 per share. I would like to thank the Board of Directors
for its continued guidance, our employees for their hard
work, our customers for their loyalty, and our shareholders
for their support.
Abdulla Bin Ali Bin Jabor Al Thani
Chairman
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Board of Directors
ANNUAL REPORT 2022
27
1. Sheikh Abdulla Bin Ali bin Jabor Al Thani
Chairman
2. Mr. Hussain Ibrahim Alfardan
Vice Chairman
(Representing Alfardan Investment Company)
3. HE Mr. Abdul Rahman Bin Hamad Al Attiyah
Member
4. Mr. Omar Hussain Alfardan
Managing Director
5. HE Mr. Khalaf Ahmed Al Mannai
Member
(Representing Qatar Insurance Company)
6. Sheikh Faisal Bin Fahad bin Jassim Al Thani
Member
7. HE Mr. Saleh Abdulla Mohamed Al Ibrahim Al Mannai
Member
8. HE. Mr. Bader Omar Al Dafa
Member
9. Mr. Mohd Ismail Mandani Al Emadi
Member
1
2
3
4
5
6
7
8
9
Focus
on the Goal
We embrace accelerated digitization to enlighten
the digital banking experience of customers.
cbq.qa
30
Vice Chairman’s Message
In 2022 Commercial Bank completed the first year of our
new five-year strategic plan (2022-2026), designed to
reshape the business and position the Bank well for building
sustainable revenue streams in the years ahead.
Commercial Bank reported another record set of results for
the year ended 31 December 2022, with the Group achieving
a net profit of QAR 2.8 billion for the period, up by 22.0%
compared to 2021, primarily driven by improved operating
income and higher contributions from our associates. This
is the highest ever net profit achieved by Commercial Bank,
beating the previous high water mark in 2021.
Our business shows strong underlying growth, with
normalized operating income of QAR 5.3 billion, up 11.0%
year-on-year, driven mainly by growth in net interest income
and as well as an increase in non-interest income.
Net interest income increased by 10.9% to QAR 4.1 billion
with net interest margin improving from 2.7% to 2.8% as we
continue to improve our funding base and reprice assets.
Loan and advances were flat as the government repaid
its temporary overdrafts due to its strong fiscal position.
Despite a decrease in the government lending book, private
sector loans increased by 4.0%. Our focus remains on
reshaping the profile of the lending book, with continued
diversification of risk across a range of sectors.
Customer deposits increased to QAR 83.2 billion, up by
1.5% year-on-year. Supported by the success of Transaction
Banking and cash management services, low-cost deposits
increased by 6.4%, which has helped reduce the cost of
funding and positively impacted our net interest margin.
Mr. Hussain Ibrahim Alfardan
Vice Chairman
ANNUAL REPORT 2022
31
Normalized fees and other income witnessed a healthy
growth of 11.4% to QAR 1.2 billion, mainly driven by an
increase in FX and trading income.
Costs were fairly flat at QAR1.1 billion. On a normalized
basis, the Group’s cost-to-income ratio improved to 21.6%
compared to 24.1% during 2021 on account of operating
income growth. The Domestic bank’s cost to income ratio
stood at 19.2%, down from 20.5% during 2021.
Another important factor driving our increase in net profit
was the contribution from our international associates,
who continued to deliver improving performance with net
profit from associates of QAR 222.3 million compared to
the previous year profit of QAR 129.3 million. In addition, we
do not have any impairment on associates’ book value as
compared to impairment of QAR 291.0 million in the previous
year. Our Turkish subsidiary Alternatif Bank reported a net
profit of TL 1,066.3 million compared to a net profit of TL
76.5 million for the previous year. However, the results
for 2022 are impacted by hyperinflation accounting by TL
943.2 million. With the hyperinflation adjustment, the net
contribution of Alternatif Bank is TL 123.1 million.
The Group’s capital remains strong. CET1 ratio and capital
adequacy ratio stood at 11.6% and 17.3% respectively,
compared with 11.7% and 18.1% in 2021. The decrease is
driven mainly by negative fair value reserves due to volatility
in world markets as well as growth in risk-weighted assets.
The Group’s capital ratios remain comfortably above the
minimum capital requirements.
The Group’s net provisions for loans and advances increased
by 7.3% compared to last year, mainly on account of
continued prudent provisioning on NPL customers and we
continue to take a cautious approach.
On behalf of the Board of Directors, I would like to convey our
sincere gratitude for the visionary and gracious leadership of
His Highness the Amir, His Excellency the Prime Minister and
Minister of the Interior, His Excellency the Minister of Finance,
His Excellency the Minister of Commerce and Industry, and
His Excellency the Governor of the Qatar Central Bank for
their wisdom in guidance and support, which we continue to
greatly appreciate.
Mr. Hussain Ibrahim Alfardan
Vice Chairman
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32
Group Chief Executive
Officer’s Message
Commercial Bank’s vision is to be the leading bank based
on the 5Cs of Commercial Bank: Corporate earnings
quality; Client experience; Creativity and innovation (Digital
Creativity); Culture; and Compliance, together with a focus on
best-in-class Transaction Banking. These 5Cs have been at
the foundation of our strategy since 2017 and 2022 marked
the first year of our new five year strategic plan (2022 –
2026).
We strongly executed our strategy in 2022, maintaining
momentum from the previous five year plan and the Bank is
now stronger and better positioned than when we started
our transformation journey in 2017. We have significantly
strengthened our risk culture, managed our legacy loan
book and proactively built new loan origination of high
quality. Our capital remains strong with CET1 at 11.6% and we
have continued to improve our cost to income ratio, moving
down from the highest in the market in 2016 at 45.7% to
21.6%, much closer to the market average. Costs have been
reduced by cutting out waste and unproductive parts of the
business, while at the same time we have continued to invest
significantly in our technology, branches, corporate premises
and people.
This investment in technology, together with a targeted
focus on Client experience, Creativity and digital innovation
has led to Commercial Bank emerging as the leader in
Transaction Banking in Qatar and an acknowledged digital
pioneer. Our collaborative “One Bank” Culture is one of our
strengths and Compliance continues to be a key focus area.
Joseph Abraham
Group Chief Executive Officer
ANNUAL REPORT 2022
33
In 2022 we deepened our collaboration with our subsidiary
Alternatif Bank in Turkey and our associates National Bank of
Oman and United Arab Bank, with our associates continuing
to deliver improving performances.
Corporate earnings quality reflects the strong execution of
our strategic plan, with the Bank reporting a net profit of QAR
2.8 billion, the second consecutive year of achieving record
profit.
Commercial Bank received several notable awards in 2022 in
recognition our achievements, including: “Bank of the Year”
in Qatar from The Banker Magazine; “Best Bank” in Qatar
from Global Finance; “Best Bank for Corporate Banking” in
Qatar from Euromoney; “Most Innovative Customer Service
Bank” in Qatar by International Finance; and “The Most
Outstanding Innovation in Fraud Detection award in the
World” from Global Finance. These awards are testament
to all our staff in Commercial Bank and our subsidiary and
associates for their hard work and dedication over several
years.
Our strategic plan has positioned Commercial Bank well for
the immediate challenges ahead in 2023 and for the longer-
term by building sustainable revenue streams and non-
lending based fee income, together with an increase in low
cost deposits due to the Bank’s market leading Transaction
Banking initiatives and digital products. With the continued
support and guidance of our Board, the commitment of our
staff and by continuing to execute our strategic plan with the
5Cs as the guiding principles for everything we do, we look
forward to growing our business sustainably in 2023.
Joseph Abraham
Group Chief Executive Officer
Keep y
your Eye
on the Ball
Commercial Bank’s continued investments
in future-proof technologies have paved the way
to prepare for one of the greatest sporting events in 2022.
cbq.qa
36
Management Review of Operations
Financial Results
In 2022, Commercial Bank delivered a net profit of QAR 2,811
million, an increase of 22.0% compared with QAR 2,304
million achieved in 2021.
Loans and advances to customers were flat at QAR 98.0
billion at 31 December 2022. The overall loan book was
impacted by the government repayments of temporary
overdrafts, which was offset by growth in private sector loans
by 4.0%.
Our deposits increased by 1.5%, to QAR 83.2 billion at 31
December 2022 compared with QAR 82.0 billion in 2021.
Low cost deposits increased by 6.4% due to the various cash
management initiatives and digital products that the Bank
offers.
Investment securities increased by 11.6% to QAR 29.8 billion
at 31 December 2022 compared with QAR 26.7 billion in
2021.
Rehan Khan
EGM, Chief Financial Officer
Financial Results (QAR million)
2022
2021
Net Interest Income
4,106
3,702
Non-Interest Income
1,188
1,399
Net Operating Income
5,294
5,101
Operating Expenses
(1,138) (1,480)
Impairment on Loans & Advances
(988) (1,099)
Impairment on Other Financial Assets &
Other Provision
(276)
(47)
Impairment on an Associate
-
(291)
Share of results of Associates
222
129
Net monetary losses due to hyperinflation (189)
-
Income Tax Expense
(114)
(9)
Net Profit for the Year
2,811
2,304
Operating Expenses (QAR million)
2022
2021
Staff Costs
595
947
General and Administrative Expenses
241
261
Depreciation and Amortization
302
272
Total Operating Expenses
1,138
1,480
Net Operating Income
Commercial Bank’s net operating income reached QAR
5,294 million for the year ended 31 December 2021, an
increase of 3.8% compared with QAR 5,101 million achieved
in 2021. On normalized basis, net operating income
increased by 11.0%.
ANNUAL REPORT 2022
37
Net interest income for the group increased by 10.9% to
QAR 4,106 million for the year ended 31 December 2022
compared with QAR 3,702 million in 2021. Net interest
margin improved to 2.8% for the year ended 31 December
2022 compared with 2.7% achieved in the same period
in 2021. The increase in margins is mainly driven by
improvement in funding base and repricing of our assets.
Non-interest income decreased by 15.1% to QAR 1,188
million for the year ended 31 December 2022 compared
with QAR 1,399 million in 2021 mainly on account of the
underlying hedge of the performance rights scheme due to
the movement of Bank’s share price. Excluding the impact
of the performance rights scheme, non-interest income
increased by 11.4% mainly driven by higher FX and trading
income which partially offset by negative in investment
income due to market volatility.
Operating Expenses
Total operating expenses decreased at a group level by
23.1% to QAR 1,138 million for the year ended 31 December
2022 compared with QAR 1,480 million in 2021. The
decrease was primarily driven by decreased staffing costs
due to accounting of performance rights granted to staff in
accordance with IFRS 2. Excluding the impact of IFRS 2, total
operating expenses decreased by 0.7% to QAR 1,142 million
for the year ended 31 December 2022 compared with QAR
1,150 million in the same period in 2021.
Net Provisions for Impairment Losses
The Group’s net provisions for loans and NPLs increased by
7.3% to QAR 1,185 million for the year ended 31 December
2022, compared to QAR 1,105 million in 2021. The non-
performing loan ratio increased to 4.9% in December 2022
compared with 4.7% in 2021, whilst loan coverage ratio
strengthened to 105.4% at 31 December 2022 from 97.4%
in 2021.
The bank sets aside a risk reserve against its lending as
part of shareholders’ equity. At 31 December 2022, the risk
reserve was QAR 2,275 million.
Total Assets and Funding
Commercial Bank balance sheet increased by 2.2% in 2022,
with total assets at QAR 169.1 billion compared with QAR
165.5 billion in 2021.
Balance sheet increase was driven mainly by increase in
due from banks by QAR 9.9 billion, increase in investment
securities by QAR 3.1 billion and this was offset by decrease
in cash and balances with central banks by QAR 9.9 billion.
Customers’ deposits increased by 1.5% to QAR 83.2 billion at
31 December 2022, compared with QAR 82.0 billion in 2021.
Low-cost deposits grew by 6.4% in 2022, contributing to the
improvement in NIMs.
Capital
Commercial Bank’s capital position remains strong, the
capital adequacy ratio stood at 17.3% as at 31 December
2022 compared with 18.1% at the end of 2021. The capital
adequacy ratio is above the Qatar Central Bank’s required
minimum level of 14.0%.
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Management Review of Operations continued
Subsidiaries
Alternatif Bank
Alternatif Bank reported a net profit of TL 1,066 million
compared to a net profit of TL 77 million for the previous
year. However, the results for 2022 are impacted by
the hyperinflation accounting by TL 943 million. With
hyperinflation adjustment, the net contribution of Alternatif
Bank is TL 123 million.
As of 31 December 2022, Alternatif Bank’s total assets stood
at TL 61.4 billion and lending at TL 36.4 billion.
Alternatif Bank provides its customers in the corporate,
commercial and retail banking segments with high
value products, services and solutions. Alternatif Bank
has 33 branches widely distributed around Turkey. In
2022, Alternatif Bank continued to work closely with its
counterparts in Commercial Bank to implement best
international practice and continue to realise synergies.
Commercial Bank Financial Services (L.L.C.)
Commercial Bank Financial Services (CBFS) is a fully owned
subsidiary of Commercial Bank. CBFS provides direct access
to the Qatar Exchange and offers seamless online trading
capabilities for individuals, institutions, corporate and foreign
counterparties. In addition to its electronic trading platform,
CBFS is also licensed by Qatar Financial Markets Authority
to act as Liquidity Provider for certain securities at Qatar
Exchange. In 2022, CBFS delivered a net profit of QAR 48
million.
Orient 1 Limited
A fully owned subsidiary, that owns and manages an
exclusive Diners Club franchise in Turkey. (Inactive)
CBQ Finance Limited
A fully owned subsidiary, incorporated in Bermuda to raise
funding for Commercial Bank by issue of debt instruments.
CB Global Trading Limited
A fully owned subsidiary, incorporated in Cayman Islands, an
intermediary vehicle for Derivatives.
CB Global Limited
A fully owned subsidiary, incorporated in Cayman Islands, an
issuing vehicle for Euro Commercial Paper and Certificate of
Deposit programme. (Under Liquidation)
CB Innovation Services (L.L.C.)
A fully owned subsidiary, incorporated in Qatar under the
Qatar Financial Centre Authority providing the Bank with
operations management services.
CB Asset Management (L.L.C.)
A fully owned subsidiary, incorporated in Qatar under the
Qatar Financial Centre Authority established to provide asset
management services.
CB Real Estate Properties (L.L.C.)
A fully owned subsidiary, incorporated in Qatar under the
Qatar Financial Centre Authority providing the Bank with
advisory services in relation to property. (Inactive)
CB Leasing Company (L.L.C.)
A fully owned subsidiary, incorporated in Qatar under the
Qatar Financial Centre Authority that leases and subleases
properties in Qatar.
Associates and a Joint Venture
National Bank of Oman (S.A.O.G.)
National Bank of Oman (NBO) achieved net profit of OMR 48
million, compared with OMR 30 million in 2021. Operating
income increased to OMR 138 million, compared with OMR
123 million in 2021.
During 2022, NBO’s loans and advances increased by 8.6%
to OMR 3.4 billion and customer deposits up 4.4% to OMR
3.0 billion.
United Arab Bank (P.J.S.C.)
United Arab Bank (UAB) continue on improving its operations
and achieve a net profit of AED 154.8 million in 2022
compared with a net profit of AED 70.2 million in 2021. There
is no goodwill impairment charge in 2022 as compared with
QAR 291 million goodwill impairment in 2021. We continue
to work closely with UAB management to ensure that UAB
achieves improved results through implementation of a its
strategic plan.
Massoun Insurance Services (L.L.C.)
Massoun Insurance Services is a Qatari incorporated joint
venture company between Commercial Bank and Qatar
Insurance Company. The company provides a range of
insurance products which have been tailored to meet the
specific needs of the Bank’s retail and corporate customers.
ANNUAL REPORT 2022
39
Wholesale Banking
Commercial Bank’s Wholesale Banking Department offers
a comprehensive range of financial products and services
to local businesses, government and public sector entities
and multinationals with a presence in Qatar. The Bank works
closely with its subsidiaries and associated companies
(Alternatif Bank in Turkey, UAB in the UAE and NBO in Oman)
to utilise credit and trade finance and other cross-border
business opportunities throughout the GCC and the wider
region and to implement a co-ordinated financial institutions
strategy across the Group, in line with their shared business
objectives. Its services include corporate finance, transaction
banking, cash management, trade, advisory services,
treasury and investment banking, across industries.
Wholesale Banking serves all corporate customer segments
providing innovative solutions and services. It has dedicated
units to provide tailored financial products to all corporate
segments including small, medium and large corporates,
contractors, government and public sector entities. The
department has strong and longstanding relationships with
leading Qatari businesses, nurtured over the years through
excellent customer service, and the application of innovative
technologies.
Business performance
In 2022, Wholesale Banking continued to contribute
the majority of the Bank’s lending portfolio and total
revenues. The department’s proactive initiatives are
aligned with the Bank’s strategic five-year plan with key
priorities such as:
• Strategically re-shaping the composition of the
balance sheet to reflect the market;
• Growing the balance sheet with selective asset
growth, in line with the market, primarily within the
government and public sector;
• Proactively de-risking the balance sheet for
sustainable growth;
• Continuing to book quality assets and ensure a
regular strong pipeline of the right customers, with
the right risk profile;
• Diversifying revenue streams;
• Sustaining the momentum on Transaction Banking
growth and staying ahead of competition with
continued innovation.
Re-shaping Wholesale Banking’s balance sheet
The balance sheet has been reshaped to reflect stresses
in the market and to ensure a quality mix of assets.
Raju Buddhiraju
EGM, Wholesale Banking
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40
Growing the government and public sector balance
sheet
In line with the overall bank policy to grow the government
and public sector balance sheet, we were able to continue
to grow our public sector books during 2022. Wholesale
Banking has activated several key government and public
sector customers where we have targeted trade products,
cash management, low cost deposits, FX opportunities and
increased adoption of digital channels in addition to growing
the asset book.
The growth of government and public sector lending and
rationalization of real estate exposure remains a strategic
aim.
Growth and strong lending pipeline
Wholesale Banking’s lending book grew by approximately
3.4% in 2022 on assets with the right risk profile and
the right quality, in conjunction with the strategic aims of
reshaping and de-risking to maintain growth and ensure a
sustainable revenue stream in the future.
Cross-selling
Fee based income was above 14% of Wholesale Banking’s
total operating income. This reflects the diversification of
revenue, as the increase of fee income is primarily from non-
lending, which is a major strategic aim of Wholesale Banking.
Wholesale Banking continues to work very closely with Retail
Banking through the successful CB@Work unit, where a key
strategic focus has been to enhance the total relationship
value for each customer across all business portfolios.
Working with Alliance banks
Wholesale Banking supports Turkish companies as well
as Qatari business interests in Oman and contributes to
the efforts of enhancing synergies with our Alliance banks,
Alternatif Bank and National Bank of Oman, through cross-
selling activities.
Domestic Corporate Banking
Domestic Corporate Banking provides a comprehensive
range of cross-product banking solutions to corporate
clients operating in Qatar. In spite of difficult market
conditions, Domestic Corporate Banking was active in
arranging large financings in the form of medium to long
term loans, working capital facilities and project specific
financing across different industries. In order to provide
customized specialized solutions to corporates, Domestic
Banking operates through different segments such as
large corporates, mid-market corporates, contracting,
government and public sector.
Small and Medium Enterprises (SMEs) play a significant role
in the development of our economy and are an important
sector in Qatar. Wholesale Banking works together with our
customers to build industry specific solutions. These include
technical, digital and financial assistance, building upon the
360-degree view of our customers. The Bank continues to
enhance the relationship management model and is focused
on digital banking innovations and to educate and migrate
customers to self-service channels. Digital channels have
given SME customers better control over cash flows and
provided flexibility to securely transact from the comfort of
their offices. Wholesale Banking remains committed to the
empowerment of the SME sector in line with Qatar National
Vision 2030.
Management Review of Operations continued
Commercial Bank wins the Best Bank for Corporate Banking award in
Qatar from Euromoney
ANNUAL REPORT 2022
41
In 2022 Domestic Corporate Banking continued to deliver
the best client experience and service quality through
innovative banking solutions. It focused on organic growth
of operations and state-of-the-art technologies to
constantly improve digital solutions to reduce paper- based
transactions and reduce turnaround time.
Transaction Banking
Wholesale Banking continues to win accolades for its
innovation, digitization and enhancing client experience. Year
2022, once again saw multiple awards and achievements
in this regard. It has expanded and enhanced host-to-
host (H2H), Point of Sale (POS), Payment Gateway and
CBPay for merchant customers, Remote Cheque Deposit
(RCD), Corporate Internet Banking / Mobile Banking with
360-degree account view. The Bank’s efforts with regards
to digitization are also recognized by various independent
agencies – Euromoney and Global Finance. The Bank saw
higher utilization of its channels- 90% of payments, 99% of
salaries and 93% of trade transactions are now conducted
digitally. Transaction Banking solutions enabled customers
to manage their payments, collections and liquidity needs
remotely with enhanced management information system
(MIS) capability.
The Transaction Banking team continued to win multiple
prestigious awards in 2022 from qualified regional and
global research organizations that look into the nominated
institutions, talent, leadership skills, industry net worth and
capability:
• Best Cash Management Bank award from Global
Finance (2016 till 2022).
• Best Mobile Banking App from Global Finance (2016 till
2022).
• Best Trade Finance Services award from Global Finance
(2016 till 2022).
• Best Integrated Corporate Banking Site from Global
Finance in Qatar and the Middle East in 2022.
• Market Leader in Digital Solutions and Corporate Banking
in Qatar from Euromoney.
• Best Bank for Corporate Banking in Qatar in (2022) from
Euromoney.
cbq.qa
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Some of other significant initiatives are as follows:
• The Bank’s trade volumes during the year 2022 have
grown substantially from ~ QR 40 Bn in 2021 to QR 45.5
Bn in 2022.
• Front and back end systems i.e. Corporate Trade Portal
(CTP) and Trade Innovation (TI) have been updated to
newer version in line with new version of SWIFT for Letter
of Guarantees (Undertaking).
• Customized B2B solutions for large public sector
conglomerates engaged in Transportation, Aviation,
Petrochemicals and Exports.
• International remittances have seen significant growth of
35.3%.
• Postdated Cheque Management solution for the benefit
of Real Estate sector that provides control of data, remote
submission of cheques and custody.
• Bulk credit and reconciliation solution, an in-house
invoice reconciliation solution for the customer with API
connectivity that updates the customer’s ERP for auto
reconciliation of transactions.
• Corporate Mobile App with rich features to conduct all
payments and inquiries of bank accounts.
• Integrated General Tax Authority payment through CIB for
corporates to provide real time enquiry and payment.
• Exclusive solutions for investors under QFZ.
• Swift GPI for corporates through CIB and mobile app for
online tracking customer transactions on real time basis.
• Multiple structured trade solutions for leading
international commodity traders, domestic strategic
public sector entities and automobile dealers that
assisted imports in Qatar on an extended credit period.
International Banking
International Banking at Commercial Bank is responsible
for providing correspondent banking services, corporate
cross-border loans and other Wholesale Banking products
to financial institutions, large corporates, sovereigns, non-
bank financial institutions, and high to ultra-high net worth
family offices based outside of Qatar. In 2022, the Bank’s
international corporate lending strategy focused mostly on
diversified sectors with strong Qatari angles.
The corporate lending business maintained its strategic
drive towards diversification, targeting landmark
opportunities both on direct balance sheet transactions and
cross-selling activities such as FX and derivatives.
Commercial Bank’s cross-border business strategy remains
cautious and focused on portfolio diversification and
revenues from trade finance flows and banks, and strategic
relationships with large corporates in the EMEA region,
Turkey, and selectively across the North American, Asia
Pacific and Sub-Saharan African markets.
The lower risk and mostly short-term trade finance book saw
prudent activity in 2022. Another key pillar of our strategy
was to collaborate more closely on correspondent banking
services, credit products and other cross-border business
activities of Commercial Bank with our Alliance bank partners
to benefit from synergistic growth across the Commercial
Bank Group.
Management Review of Operations continued
Commercial Bank participates in IIF and IMF meetings in Washington DC
ANNUAL REPORT 2022
43
Diversifying funding
The International Banking Department also plays a key role in
supporting the Bank’s funding needs by leveraging its global
relationships and supporting the Treasury Department in
diversifying the Bank’s funding. This is achieved by arranging
bilateral and syndicated loans for the Bank and expanding
treasury and corporate deposit relationships with regional
and Asian sovereign wealth funds, asset managers, and
other nonbank financial institutions.
Commercial Bank continues to support its financing and
services network with global trade and development
institutions such as the ICC Banking Commission, SWIFT, the
Institute of International Finance, the International Finance
Corporation, IMF, Arab Trade Finance Program, ISDA and
other development institutions.
2023 priorities
Moving forward, our strategic priorities in 2023 and beyond
will be to manage and expand the business along the
following lines:
• Focus on opportunistic growth in the network countries of
our Alliance banks, with a view to strengthening the client
proposition and create synergies in these markets;
• Diversify cautiously into Asia and Africa as trade and
investment flows pick up and also grow into developed
markets like the US, UK and select OECD countries for
portfolio diversification and risk management purposes;
• Enhance the value proposition by developing structured
finance, distribution, trade, and treasury capabilities,
which lead to increased cross-selling and improve
International Banking’s portfolio returns;
• Maintain a well-diversified portfolio with no large
concentrations in line with regulatory and the Bank’s
governance standards, focusing on tangible collateral
and security support for risk mitigation to withstand credit
event downturns;
• Support the Commercial Bank Group’s funding initiatives
and balance sheet growth by leveraging Commercial
Bank’s international corporate network.
Fahad Badar
EGM, International Banking
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CBQ Retail Banking
Our Go-Forward Retail Bank Growth Strategy is sharply
focused on delivering world class experiences to our clients
at every touchpoint. Through Digital Engagement, Flagship
Branches, Luxurious Premium Lounges and Proactive
Relationships with customers, we have consistently
exceeded expectations in delivering the best. Our broad
product range includes bank accounts, deposits, loans,
credit cards, insurance, and wealth management. These
financial solutions help our customers - both individuals and
business entities.
The use of advanced analytics, has helped us identify and
cater to the unique needs of our customers and personalize
their experience with the Bank. This persistent focus on
our clients aligned with core strategic priorities, will deliver
our vision to become ‘The Most Profitable, Most Innovative
and The Most Dominant Retail Bank in Qatar over the next 4
years’.
As a business group, we are fully aligned and committed
to the Bank’s strategy underpinned by the 5 C’s, Corporate
Earnings Quality, Client Experience, Creativity & Innovation,
Culture and Compliance.
We are proud to have won numerous awards, as a testimony
to our commitment and innovation. Many of the awards
received for the year 2022 were for excellence in the digital
banking space. Some of our achievements include:
• Upgrade of Commercial Bank’s rating to A- from BBB+ by
S&P.
• “Best Bank in Qatar” award by Global Finance.
• “Market Leader in Digital Solutions” award in Qatar by
Euromoney.
• “Most Innovative Customer Service Bank” award by
International Finance.
• “Best Online deposit, Card and Investment Product
Offerings” in Qatar by Global Finance.
• “The Most Outstanding Innovation in Fraud Detection
award in the world” award from Global Finance.
• “Best User Experience (UX) Design in Qatar” by Global
Finance.
• “Most Innovative Trading Application in Qatar” from
International Finance.
• Bank of The Year award in Qatar from The Banker.
Business performance
Retail Banking continues to contribute significantly to
Commercial Bank’s overall performance. Built on a strong
franchise of customer service and innovation, Retail Banking
has delivered strong performance in 2022.
Management Review of Operations continued
Shahnawaz Rashid
EGM, Consumer Banking
ANNUAL REPORT 2022
45
The Retail balance sheet remained healthy with lending
portfolio valued at QAR 10 billion and deposits growing to
QAR 19.9 billion for FY 2022.
Branch, Self-Service Machines and ATM Network
The physical network of 33 branches forms an integral
part of the Commercial Bank’s distribution strategy.
It creates the space for customers to access services
quickly and connect with advisors about financial
solutions that are personalized to their requirements.
Our distribution model has been reshaped to include
three distinct styles of branches to cater to all customer
needs. These fit-for-purpose branches serve multiple
segments of customers with differentiated services.
First, we have the modern look-and-feel of our “Smart
Branches” offer customers increased self-service
functionality where customers can use our branches 24x7
at their convenience to print their Cheque Books, Credit
and Debit Cards instantaneously in less than 5 minutes.
City Centre Branch is our largest digital lobby with a
wide range of self-service machines combined with the
new streamlined design enabling clients to easily and
effectively meet their banking needs.
Customers can book appointments prior to visiting
our branches to reduce the waiting time and ensure
that they are served efficiently through the recently
launched Paperless module that gives them a hassle-free
experience.
The second style of branches includes CB Premium
Lounges that play an important role in redefining the
banking experience, providing unmatched premium
services by specialized Relationship Managers to
complement client’s wealth building objectives. The
Premium Lounges offer tailored services to premium clients
and personalized advisory solutions while being surrounded
by luxury and comfort.
We take great pride in delivering quality service to all our
customers, with our Private Banking and Sadara Premium
Banking services leading with exceptional standards.
Lastly, we have the traditional branches continue to serve the
day-to-day financial needs of our customers.
Our fleet of 202 ATMs is geographically distributed across
the country to ensure optimum usage of the network. In
addition to the customary operations of receiving and
dispensing cash, the machines also process bill payments,
transfers and accept cheque deposits.
Furthermore, there are multiple machines specifically
designed for other self-service functions including the
instant printing of new debit cards, credit cards and cheque
books.
Retail Internet and Mobile Banking
Motivated by our continued digital success, we maintained
persistent efforts in 2022 to deliver a revamped Mobile
Banking App.
Through the market leading CBQ Mobile App and Internet
Banking services, we offer a wide range of digital services
including International Remittances to over 40 countries
at the click of a button, allowing customers to send to bank
accounts and through cash pickup services, including wallet
accounts.
cbq.qa
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For selected countries, this service is instant allowing
customer to remit funds to their beneficiary in under 60
seconds. With an extensive use of the remittance service
among customers, CB Remittance is one of our most
popular digital services.
The Exchange Rate alert feature on CBQ Mobile App allows
customers to set alerts to receive notifications when the
desired foreign exchange rates are reached.
We further expanded our faster payment service to the
growing communities in the African regions through our
partnership with Western Union.
Whilst we grew our geographic reach, we continued to
enhance customer experience with the introduction of
bundled remittance offers where regular customers can buy
discounted packages, and the first-time users benefit from
free transfers.
Given the high adoption rate of digitally active customers,
over 99% of financial transactions are now done through
automated channels.
Beside ongoing innovation on the digital front, the Bank
has provided many first-to-market services such as Mobile
cheque deposits, PayCards for household workers, CB Pay
for Merchants, allowing payments to merchants using Mobile
numbers and QR code, CB Pay Link for Non-CB customers
and Qatar Mobile Payment (mPay).
We also introduced CB Voice for customers to register their
voice as an alternate Biometric identification feature.
To safeguard customers’ accounts and to protect them from
fraud and cybercrime, we introduced CB Direct Notifications
that sends alerts to customer registered CBQ Mobile App in
case of a suspicious activity.
These innovations have been accepted and adopted
extensively by customers, and one such service is the
CBsafe ID, which allows customers to easily identify and
authenticate calls from Commercial Bank employees, limiting
opportunities for frauds cases.
CB Video Relationship Manager is another service
introduced by the Bank that facilitates face-to-face customer
interactions through a virtual platform, innovatively serving
customer and strengthening client relations.
Through this feature customers can complete applications,
exchange documents, and submit instructions with a digitally
recorded signature to fast-track transaction execution.
We are proud that our CBQ Mobile App is consistently
awarded by global bodies, but more importantly, our
customer satisfaction remains high with net promoter score
ratings above 72.
Cards & Payments
Commercial Bank has a prominent position in Qatar as a
provider of Credit cards, offering a range of credit and debit
cards, including a range of premium and ultra premium Visa/
MasterCard cards and has the sole franchise for Diners Cards
in Qatar.
Commercial Bank was amongst the first to launch the
Tap N’ Pay card technology in Qatar in 2018, and the first
to introduce the comprehensive contactless payment
ecosystem in the country. The Bank has continued to
leverage the contactless and tokenization payment platform
and this year we successfully launched Google Pay &
Samsung Wallet in addition to innovative payment solutions
like Apple Pay and payments through wearables like Garmin
and Fitbit. Contactless transactions contribute to 67% of the
total transactions performed on Debit & Credit Cards at POS
terminals.
Commercial Bank also leads the way in reshaping the
banking experience for its customers in the merchant
acquiring space. We are constantly looking for solutions
to ease customers payments and merchant partners
acceptance of such payments. We continue to grow our
presence across business segments through market
leading products with increased focus on innovations
to support card-not-present customers. Leading these
innovations from the Covid era, the Bank has introduced
CBPay for Merchants where a payment can easily be made
to the goods/service provided through link shared by the
merchant or QR code.
To support the increase in tourism from Asian geographies
especially China, Commercial Bank has expanded the reach
of Union Pay International cards issued in China by enabling
acceptance of UPI Cards on 189 Commercial Bank ATM’s
in addition to supporting UPI Card members having the
Management Review of Operations continued
ANNUAL REPORT 2022
47
capability to pay with their credit or debit cards across ten
thousand plus POS supported locations.
CB-VPOS: The Bank launched first-of-its-kind cards
payment acceptance solution, the virtual point of sale
service “CB VPOS”. CB VPOS provides a mobile based POS
payment solution that allows merchant customers to accept
contactless card payments on Android phones in a safe, easy
and convenient manner, without the need for any additional
hardware. While this new digital payment solution will be
available for all merchants, we are looking to help increase
the acceptance of cards in the cash dominant businesses
such as small merchants, registered home business, small
micro merchants, grocery shops, coffee shops and many
CB City Centre flagship branch newly renovated with modern design
Commercial Bank opened its second Exclusive Premium Lounge at Place
Vendome Mall. A unique addition to the CB Premium Banking experience
Commercial Bank opened its new branch at Hamad Port
Visa showcased the FIFA World Cup™ Winner’s Trophy at Commercial Bank
premises
Commercial Bank inaugurated its first exclusive Sadara Youth lounge at the
Qatar University Metro Station Branch
cbq.qa
48
others. This innovative and cost-effective contactless
payment acceptance technology contributes to our direction
towards supporting the government’s vision of becoming
a cashless society and the reach of acceptance created will
also help expand financial inclusion.
With an active affluent customer base, our propositions are
designed to acquire higher salary bracket customers while
we continue to invest in our flagship portfolio of the Limited-
Edition Black Cards.
Commercial Bank’s cards and payments business witnessed
high engagement in the recently concluded FIFA World Cup
Qatar 2022™. The Bank launched 3 unique FIFA card designs
that were well accepted by the Bank’s customers. We ran
multiple card campaigns using FIFA assets like hospitality
packages and match tickets to engage with our customers.
The acquiring business also supported merchants by
processing over 8 million transactions during the FIFA World
Cup season. We provided the CB VPOS solution to 1,400
taxis to support card acceptance of incoming tourists during
FIFA.
Wealth Management
The focus on building Wealth Management capabilities
continued through the year as it remains a core pillar of
our services that supplement our strong Retail Banking
franchise. Investments in people, process, products and
systems were key focus areas in building a strong foundation
to provide Wealth Advisory services through a trusted and
robust Wealth architecture.
We offer clients access to local and global investment
products serviced by qualified and accredited wealth
advisors who are provided with the right tools in facilitating
our customers’ journey. We continue to focus on automating
operational processes, introducing innovative products, and
expanding access to traditional wealth products that cater
to our customer base and help them in diversifying their
portfolios.
In addition to providing global wealth management
solutions, we continued to strengthen our position in the
local Qatar Exchange Market through our market leading
brokerage services offered by Commercial Bank Financial
Services (L.L.C.) (CBFS), a wholly owned subsidiary of
Commercial Bank, licensed by the QFMA. CBFS is among
the top 3 brokerage houses in Qatar with the largest capital
base of over QAR 800 Million. It provides customers with the
ability to trade stocks listed on Qatar Stock Exchange, Bonds
and T–bills along with access to Margin Facilities, Asset
Management and Liquidity Provision services to our clients.
Within the local equity market, CBFS has been a pioneer in
Margin Trading with the largest margin book that currently
offers 0% margin for 3 months to select clients, a first in
the market service. With an award-winning mobile trading
application and online platform, CBFS is aligned with the
Bank’s overall digital innovation strategy.
Customer Acquisition
Customer acquisition is the lifeblood for Retail Banking
and the Bank has focused on enhancing the numerous
methods that enable new customers to join the Bank. We
provide easy-to-apply and digitally enhanced account
applications that support instant account opening and
fulfilment processes. The focus remains on delivering value
by rightsizing client income segments and strengthening
acquisition strategies. An enhanced CB@Work proposition,
along with an exclusive service and sales platform, helped
establish the Bank as a key originator of expatriate and Qatari
accounts with the cards proposition at the center in driving
salary account acquisition.
To support the network responsible for customer
acquisition, Retail Banking continued investing resources
to further enhance digital solutions to serve our clients and
improve turnaround times from account opening to account
fulfilment.
Focus on the Youth
As a leading Bank in the country, we are committed to
investing in the future generation with unique propositions
such as Sadara Youth, an exclusive program dedicated to
young Qatari customers aged between 18 and 25 years.
The first Sadara Youth lounge was inaugurated at the Qatar
University Metro Station branch. This unique branch was
designed by university students showcasing creativity,
innovation, and usefulness. The distinctive style of this
branch fulfills the Bank’s target in supporting the Qatar
National Vision 2030, and caters to the needs of this
dynamic segment, while providing an ideal location to meet,
connect, chat and exchange ideas.
Management Review of Operations continued
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Treasury and Investments
The Commercial Bank’s Treasury and Investments
Department is responsible for asset-liability management,
capital and financial market investments, trading, and
treasury sales. The Department manages the overall
funding and liquidity requirements of the Bank. This
includes management of operational and strategic liquidity
requirements, as well as accessing the international debt
capital markets for funding needs.
Departmental functions
Proactive management allows the Bank to manage its
funding base in a cost-efficient manner while ensuring
its balance sheet is managed in accordance with the
expectations of rating agencies, regulators, the Board of
Directors and shareholders. The department’s treasury and
Investments function has been instrumental in maintaining a
stable cost of funding, managing the duration of the Bank’s
liabilities in a volatile interest rate environment, seeking
diversification of funding channels, and maintaining key
liquidity ratios and related business regulatory ratios as
required by the Qatar Central Bank.
The department’s investments function is engaged in
managing the Bank’s investments in capital markets
to achieve superior and stable returns. It continued to
provide strong revenue generation in 2022 whilst ensuring
a liquidity buffer for the Bank by focusing on liquid and
diversified investments. Its goal in 2023 is to maintain
returns momentum in a challenging geopolitical and
monetary policy environment aggravated by the COVID-
19. The investment emphasis remains on active portfolio
management to optimize returns and ensure effective risk
management by flexible asset allocation, hedging, and
duration management.
Treasury Sales
The Treasury Sales unit provides a full suite of products to
the Bank’s customers, supporting their needs with regards
to managing and hedging their foreign exchange, interest
rate exposures and other asset classes. Commercial Bank
Treasury and Investments department continues to grow
its footprint as a leading market-maker in the regional rates,
fixed income, treasury securities, and FX markets, and in
providing market access to corporates and institutions.
In 2022, Commercial Bank Treasury and Investments
expanded its capacity to support client needs by adding
digital execution capabilities and risk management solutions,
both domestically as well as cross-border, demonstrating its
ability to provide seamless client solutions across multiple
geographies.
Treasury is also actively engaged with Commercial Bank’s
subsidiary in Turkey – Alternatif Bank to provide end-to end
origination, structuring, negotiation, and execution.
Parvez Khan
EGM, Treasury and Investments
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Risk Management
Managing risk is a fundamental part of Commercial Bank’s
day-to-day business activities. As part of the overall
corporate governance framework, the Board of Directors
is responsible for overseeing a strong risk governance
framework, including a strong risk culture, a well-developed
risk appetite – articulated through the Bank’s Risk Appetite
Statement – and well-defined responsibilities for risk
management and control functions. The keystone of the
Bank’s risk governance framework is the three lines of
defense, namely:
1. The first line of defense consisting of frontline business
units and functions that create risk. These groups are the
Bank’s primary risk-takers, responsible for implementing
effective internal controls and maintaining processes for
identifying, assessing, controlling, and mitigating the risks
associated with their activities, consistent with the Bank’s
Risk Appetite Statement and risk limits.
2. The second line of defense consisting of independent
risk management, which oversees risk-taking and
assesses risks independent of frontline business
units and functions that create risk. Independent risk
management complements the frontline units’ risk-
taking activities through its monitoring and reporting
responsibilities, including compliance with the Bank’s risk
appetite, and is responsible for identifying, measuring,
monitoring, and controlling aggregate and emerging
risks enterprise-wide.
3. The third line of defense consisting of internal audit,
which provides independent assurance to the Board on
the effectiveness of governance, risk management, and
internal controls.
During 2022, Commercial Bank continued its efforts to
improve its overall risk platforms, including a well-balanced
and agile risk organization, comprehensive approach
to managing cost of risk, and an improved approach to
managing non-financial risk.
In 2023, Commercial Bank will continue to employ clear risk
management objectives and well-established strategies
with focus on implementation of systems and enhanced risk
monitoring.
Credit Risk
Commercial Bank has clearly defined credit policies for
the approval and management of credit risk. Formal
credit standards apply to all credit risks decisions, with
specific portfolio standards applying to all major lending
areas. These incorporate obligor quality, income capacity,
repayment sources, acceptable terms and security, and loan
documentation tests.
The Bank assesses the integrity and ability of debtors or
counterparties to meet their contracted financial obligations
for repayment. Collateral security such as real estate, charge
over income or assets, and financial securities is generally
taken for business credit, except for government, major
Management Review of Operations continued
Antonio Gámez
EGM, Chief Risk Officer
ANNUAL REPORT 2022
51
banks and corporate counterparties that are externally
risk-rated and of strong financial standing. The Bank uses
risk ratings models to govern decision making both on
Corporate Lending and Retail Lending Businesses. This bring
about standardization and consistency of rating borrowers.
Non-Financial Risk
The Bank introduced the concept of Non-Financial Risk
which includes Operational Risk, Third Party Risk, Cyber
Security Overview Vendor Management, Business Continuity
and Change Management. Operational Risk is the risk of
loss resulting from inadequate or failed internal processes,
people and systems, or from external events. It includes legal
risk but excludes strategic and reputational risk.
The Non-Financial Risk Department supports the
achievement of Commercial Bank’s financial and business
goals. NFR ensures that the bank adopts industry standards
in evaluation of key risk and uses the necessary tools to
manage and monitor these risks. The primary objectives of
the NFR Department are:
• Maintenance of an effective internal control environment
and system of internal control;
• Demonstration of effective governance, including a
consistent approach to managing non-financial risk
across the Bank;
• Transparency, escalation and resolution of risk and
control incidents and issues;
• Effectively overviewing the policy and review of Cyber
Security as second line of defense;
• Making sure that there is high level of resilience and
preparedness in the event of any business continuity
disruptions.
Market Risk
Market Risk is the potential loss in value or earnings arising
from changes in market factors, and is managed by the
Bank’s Market Risk Department with oversight by the
Management Risk Committee, which provides specific
guidelines for market risk management. Matters covered
includes risk emanating from the Trading Book, Banking
Book and Counterparty Risk Management.
Market Risk managed as part of the Risk Appetite Framework
which has granular levels of risk metrics including value-
at-risk (‘VaR’) for potential loss using historically observed
market volatility, Stressed VaR is used at the Bank to measure
the potential for economic loss from extreme market events,
earnings-at-risk (EaR), and economic value of equity (‘EVE’)
for Interest Rate Risk and Dv01 for change in yield.
The results of these measures are reported to the
Management Risk Committee, Asset Liability Committee and
Investment Committee on a regular basis.
Liquidity and Funding Management
Commercial Bank follows a balanced liquidity management
strategy through the combined use of liquid asset holdings
and borrowed liquidity to meet its liquidity needs. The Bank’s
funding policies provide that:
• Liquidity requirements be measured using several
approaches including sources and uses, structure of
funds, and liquidity indicators;
• An appropriate level of assets is retained in highly liquid
form;
• The level of liquid assets complies with stressed scenario
assumptions to provide for the risk of the Bank’s
committed but undrawn lending obligations;
• Establishment of credit lines.
• Formalized Contingency Funding Plan that is reviewed
periodically by ALCO.
Board Risk-related Committees
The two Board Committees that have primary responsibility
and oversight for risk are:
1. The Board Risk Committee (‘BRC’), which is
responsible for all aspects of enterprise wide risk
management including, but not limited to, credit risk,
market risk, liquidity risk and operational risk. The BRC
reviews policy on all risk issues and maintains oversight of
all Bank risks.
2. The Board Executive Committee (‘BEC’) which is
responsible for evaluating and granting credit facilities
within authorized limits as per Qatar Central Bank and
Board guidelines.
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The Board of Directors or its subcommittees are regularly
updated on any potential risk that the Bank may face.
Risk Management continues to be very well positioned to
manage risk resulting from the increasing sophistication,
scope and diversity of the Bank’s business and operations.
In summary, the governance framework, policies and
administrative procedures and practices relating to risk
management in Commercial Bank align well with global best
practice, the recommendations of the Basel Committee and
the guidelines of Qatar Central Bank.
Marketing
The Marketing Department of Commercial Bank establishes
and promotes the Bank’s reputation and brand identity
to stakeholders and customers through effective
communication using both traditional and digital media
channels.
Marketing works closely with the Bank’s main business units
and supports functions to develop integrated marketing
campaigns targeting different customer segments with
diverse products and services based on ongoing research,
consumer insight and return on investment analysis.
Marketing also runs the Bank’s sponsorships and key
events, as well as its Corporate Social Responsibility (CSR)
programmes. We seek to have honest, fair and transparent
marketing and communication.
Commercial Bank is proud of its leading position as a digital
Bank. Through exemplary thought leadership in digital
marketing – alongside our proactive approach to digital
media, introduction of first-to market technologies, quality
content offering, and customer engagement on and through
social media – Commercial Bank continues to dominate
Qatar’s digital banking spaces.
Following a national vision
Commercial Bank’s successes and achievements this year
emerged from the Bank’s commitment towards Qatar
National Vision 2030, which inspired us to achieve results,
in alignment with the country’s key strategic messages and
fulfilment of the Qatar National Vision 2030.
For 2022, our National Day theme was “Welcoming the
World to Qatar”. It is simple as it states that in 2022 we
were welcoming the whole world in Qatar as the World Cup
finals coincided with Qatar National Day. Inspired by that,
we created a social media campaign to celebrate QND by
creating a combined set of flags that show unity and reflect
how Qatar is welcoming the countries that are participating
in the biggest global sports event that took place for the first
time ever in Qatar.
Social Media
Our Brand Narrative has been dictating on how our
communication strategy is being developed, and following
our Brand DNA and making sure we give our customers the
guidance they deserve, we do follow three points for our
bank’s strategy: to guide, humanize and innovate.
In addition to investments in digital technologies, excellence
in communication to support clear, simple banking is a
focus. CB’s social media approach encouraged customers
to #GoDigital in six languages across all available channels,
using friendly, understandable language. This is part of
the Bank’s print free strategy aiming to eliminate printed
collaterals in branches. In addition to that, we have invested
in led Plaza screens to replace printed materials.
Commercial Bank extends innovation to its communication
approaches and is keep to humanize all its communication,
and this is clearly reflected in CB’s continuing commitment to
guide its audience:
• #CBteamforyouseries: the football edition allowed our
employees to share their excitement on the FIFA World
Cup Qatar 2022™, sharing their passion for football
through work life balance series.
• #WhoisCBteam: a series which introduces our customers
to the team behind CB. The extraordinary people that
make Commercial Bank the success it is.
We can say this approach has earned Commercial Bank a
leading position amongst the financial institutions in Qatar,
and the trust of our global financial partners.
Management Review of Operations continued
ANNUAL REPORT 2022
53
Commercial Bank launched several social media campaigns
during the World Cup to ensure that visitors to Qatar are fully
aware of the Bank’s readiness to provide them with cashless
payment solutions, easy transactions and 60 seconds
remittances in addition to many other services which allows
them to enjoy a seamless world-class banking experience
while in the country. There was also another campaign held
to show our support to Qatar National Team and interact with
our football fan customers.
Commercial Bank’s exceptional social media strategy led to
the Bank being recognized by the most reputable awarding
bodies. In 2022, Commercial Bank won the Best in Social
Media Marketing & Services in Qatar in the world by Global
Finance for the second year in a row.
2022 Awards
As we celebrate continuous success and innovation,
Commercial Bank has garnered this year more than 20
prestigious awards locally, regionally and globally:
• “Serving Business Owners” award in Private Banking and
Wealth Management in Qatar from Euromoney.
• “Best Bank” award in Qatar by Global Finance.
• “Best Trade Finance Provider” award in Qatar by Global
Finance.
• “The Most Outstanding Innovation in Fraud Detection
award in the world” from Global Finance.
Commercial Bank wins prestigious awards in 2022
Hussein M Ali Al-Abdulla
EGM, Chief Marketing Officer, and
Head of CB Premium Banking
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• “Most Innovative Customer Service Bank” award in Qatar
by International Finance.
• “Most Innovative Mobile Trading Application” award from
International Finance Magazine.
• “Best Bank for Corporate Banking” award in Qatar from
Euromoney.
• Leader in Qatar in Digital Solutions, Corporate Banking,
and Corporate Social Responsibility from Euromoney.
• CB Ranked First in Banking at the Top CEO Awards 2022.
• “Bank of the Year” award in Qatar by The Banker.
• “Best Leading Corporate for Investor Relations” award in
Qatar at MEIRA Annual Conference & Awards 2022.
From Global Finance:
On consumer level in Qatar:
• Best Online Deposit, Card and Investment Product
Offerings.
• Best User Experience (UX) Design.
• Best in Social Media Marketing and Consumer Services.
• Best Open Banking APIs.
On consumer level in the world:
• Best in Social Media Marketing and Consumer Services.
On corporate level in Qatar:
• Best Trade Finance Services.
• Best Integrated Corporate Banking Site.
• Best Mobile Banking App.
On corporate level in the Middle East:
• Best Integrated Corporate Banking Site.
Corporate Social Responsibility (CSR)
Commercial Bank’s longstanding commitment to Corporate
Social Responsibility (CSR) has been an inbuilt element of
the Bank’s structure since its inception over forty-eight
years ago. The Bank committed to giving back to the wider
community in support of Qatar National Vision and through
corporate social responsibility programmes formulated and
implemented by the Bank’s Marketing Department.
Ramadan initiatives
As part of Commercial Bank CSR, the Bank organized a
number of charity annual events in cooperation with Qatar
Red Crescent. Ramadan Iftar meals were distributed for
labor and people in need in the community.
Donation campaigns
In order to fulfill its commitment towards improving the
population’s health in Qatar and extending the needed help
to those in need in the society, Commercial Bank joined
its efforts with Qatar Society for Rehabilitation of Special
Needs. The Bank donated to purchase medical equipment
that catered for different types of impairments including
movement, visual and hearing impairments, to empower the
people with special needs since they represent one of the
important segments in the society.
As one of its core strategies, Commercial Bank made sure
to spread hope among the people with special needs
through its contribution to ensure happiness and quality of
life are provided where it’s needed in the Qatari community.
Commercial Bank has its own outstanding record in
supporting charitable projects and always work to fulfil its
social responsibility towards the community in Qatar.
Sports, health, and fitness
At Commercial Bank, our people are our greatest asset, and
we are committed to invest in their wellbeing. Improving the
nation’s health is also one of the most important parts of the
human development pillar of the Qatar National Vision 2030,
and we promote sports and wellness activities for our staff
not only during National Sports Day but throughout the year,
advertising the message that sport and physical exercise
perform a vital function for the community, promoting active
and healthy lifestyles and cultivating values of dedication,
teamwork, competition and good sportsmanship.
Management Review of Operations continued
ANNUAL REPORT 2022
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2022 has been a momentous year in Qatar when it
welcomed the world to Doha for the World Cup. This has
undoubtedly been a success for Qatar and the country’s
leadership has delivered the biggest sports event in the
world to an exceptional standard. Commercial Bank has
been keen to take part in the general vibes of the FIFA World
Cup with the “First CB Football Cup 2022”, where several
teams from Commercial Bank competed to win the title.
Commercial Bank has also embarked on a series of
well-organized events and activities that showcased its
commitment towards promoting sports. Commercial Bank
Staff Club again prepared an exclusive CB Olympics event for
staff which included a female only event for the first time. The
event turned out to be an intense competition, spreading a
positive energy that represents the Bank’s character. The CB
Olympics event was a two-day full of challenges designed
to promote competition, teamwork, and boost employees’
morals. Commercial Bank Staff Club is keen on fulfilling the
Bank’s obligation towards promoting sports and wellness
activities for staff by providing a selection of fitness training
programmes designed and scheduled to run throughout the
year.
Sponsorship programs
Commercial Bank remains committed to enhancing Qatar’s
sporting reputation by bringing the best international
competitors to Qatar annually for a golf tournament that
attracts a global audience. As a result of this commitment,
the Bank and Qatar Golf Association hosted Commercial
Bank Qatar Masters Golf Tournament. The highly anticipated
event is an annual golf tournament on the DP World Tour
Calendar and is organized by Qatar Golf Association, Qatar
Olympic Committee, Doha Golf Club, and Commercial Bank,
the long-term Title Sponsor. The tournament is considered
Qatar’s annual “must attend” sporting and social event, first
held in 1998 and widely known for bringing together the
world’s best golf talents.
In the same context, the organizers hosted the Commercial
Bank Qatar Masters Pro-Am Tournament where local
amateur golfers got the chance to play with the professional
golfers participating in the tournament. It is the live proof of
the Bank’s keenness on playing an active role in spreading
awareness to the public in the field sport.
Commercial Bank and the magnificent Longines Arena at
Al Shaqab, a member of Qatar Foundation, welcomed the
world’s top riders and horses in Commercial Bank CHI AL
SHAQAB Presented by Longines equestrian competition
from 24th to 26th of February 2022. This is a continuation
to the three-year partnership agreement Commercial Bank
signed with Al Shaqab for the Bank to be the Title Sponsor of
the country’s premier equestrian competition.
Commercial Bank CHI AL SHAQAB Presented by Longines
is a signature equestrian competition which provides an
exhilarating mix of top-class equestrian sport and fun
filled-family entertainment on a three-day event. The Bank’s
sponsorship of the equestrian event reflects its commitment
to supporting and promoting Qatar’s heritage and legacy.
Health awareness
In order to fulfill its commitment towards improving
the population’s health in Qatar, Commercial Bank, has
conducted a variety of exciting awareness-raising activities
and workshops for its employees to raise awareness on
breast cancer early detection. Under the slogan “Fight
Against Breast Cancer,” where CB female employees had
the opportunity to attend an informative “Breast Cancer
Awareness Session” and enjoy exciting activities held
in parallel. The informative workshop was delivered by
specialists in the Health Education Department at the
Qatar Cancer Society, where it also included fun and useful
activities.
Commercial Bank employees also got the chance to meet
with a breast cancer survivor, who shared her inspirational
story of struggling with and overcoming the disease.
Educating the public and spreading awareness
Following our Brand DNA and making sure we give our
customers the guidance they deserve, Commercial Bank
launched a number of awareness campaigns aiming to
spread awareness in the society, in addition to educating
and guiding our customers in their banking journey with
Commercial Bank:
• #CBTips: In addition to guiding our customers on how to
use our products and services, encouraging responsible
banking and customer behavior, we have introduced
in 2022 an important element of our communications
strategy which is #CBTips spreading awareness to
Management Review of Operations continued
ANNUAL REPORT 2022
57
customers in various finance management areas in
addition to educating them on how to become traders.
#CBTips series stemmed from our responsibility to
educate our customers on financial literacy and on how to
conduct their banking transactions digitally. Considering
the huge effect of social media in the society, we have
revamped and utilized our various social media platforms
to communicate, in an engaging and interactive way,
with our customers and tackle this issue and educate
repeatedly through those channels.
Part of #CBTips was Abdulla’s Trading Tips #CBtrading
series which helps customers gain insightful information
and tips and allows our interested customers to become
trade masters. One of the Bank’s most popular series is
‘Abdulla’s Trading Tips’, presented bi-weekly by one of our
colleagues, Abdulla Al Sayegh.
• #CBsafe: a public awareness anti-fraud campaign
revolving around the slogan ‘Check. Stop. Report’,
with tips on how to identify scam attempts and how to
respond. Campaign publicity included collaboration
with ‘I Love Qatar’, the biggest online platform for
expats in Qatar. It involved usage of cartoon figures to
communicate in a simple easy way with customers.
We have also launched awareness #CBsafe videos with
various scamming schemes to spread awareness during
global sports events.
Qatari youth
Commercial Bank takes pride in being a Qatari bank and
supporting all four pillars of the Qatar National Vision 2030
through our activities, with a focus on strengthening the
economy through our services and investing in Qatar’s
human capital talent as one of the largest private sector
employers in the country.
The Bank’s National Development Programme invests
heavily in the skills and training of young Qataris and we
look forward to continuing to support Qatar on its journey
towards sustainable development and prosperity, for the
benefit of current and future generations.
The National Talent Development Program at the Bank
created the CB Pearl program, a program which enables
the right type of culture that the Bank’s vision is seeking. CB
Pearl program has created a culture of sharing knowledge
between leader, peers and juniors. Employees are provided
an opportunity to discuss creative ideas engaging in topics
and debates that aim to enhance one’s scope of business
and economic understanding.
Volunteering
Commercial Bank believes in the importance of volunteering
as it enables individuals to help others in a selfless way. The
Bank’s volunteering program encourages employees to
help people, support philanthropic causes and aid their local
community.
In 2022, CB Ramadan volunteers distributed 1,500
Garangoh gifts for children in mall branches, hospitals,
and schools; others distributed 1,000 food boxes to poor
families identified by Qatar Charity, and another 1,000 Iftar
boxes were distributed for the public in the Corniche, Souq
Waqif and Souq Al-Wakrah. The aim of this campaign was
for everybody to participate and take part in the Bank’s CSR
agenda by helping impoverished families amidst these
tough times. The participation of the Bank’s employees in this
campaign during Ramadan reflects our commitment to the
“one bank, one team” culture.
As part of its Go Green sustainable initiative, Commercial
Bank has organized a beach cleaning day where 30
employees have volunteered to be part of this project in
participation with “DEAP Qatar” initiative to keep Qatar’s
beaches clean.
CSR recognition
Commercial Bank’s commitment to Corporate Social
Responsibility has gained the Bank recognition from
prestigious entities. Euromoney has ranked Commercial
Bank as a Market Leader in Qatar in Corporate Social
Responsibility based on its 2022 Market Leaders ranking
analysis.
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Human Capital
In 2022, Commercial Bank continued to invest in its
entrepreneurial and performance culture. Driven with the
agility of the management teams, Commercial Bank further
enhanced its performance module applied with executive
changes and rewards strategies.
• Continuing with our performance management system
and putting more focus on people, conversations and
development; with the focus on careers and talents
pipelines.
• Leaders development, enhanced risks measures,
compliance, and audit.
• Strategically and operationally sourcing, by attracting and
recruiting the right talents that will contribute further in
delivering on the Bank’s strategic plan.
• Partnering with the ministries and educational
institutions; in partnership with the Ministry of Labour
to source national talent and provide them with career
opportunities within the Bank Nationalization plans,
the Bank contributes to education and development
in collaboration with universities and schools through
events and training programs. Delivered virtually and
on campus, student engagement events held in 2022
provided students with key insight on how to transfer
academic excellence into performance.
• Recognized and awarded by Ministry of Labour,
Commercial Bank continued its nationalization strategy
through the focus on internal development programs and
quality training programs in partnership with international
institutes.
• Continuing on our e-learning approaches, developed
with the business expertise in Commercial Bank. Story-
based e-learning courses, built on real life sceneries and
cases, enhancing and delivering compliances and on
demand learning.
Learning and development
We invest in making Commercial Bank a great place for
learning. We target our development resources toward our
people who are skilled in sharing knowledge and training
others through leader-led training. This strengthens our
creative and innovative culture.
With on-demand learning portal, we have provided
all compliance courses through e-learning. With other
development initiatives, we are pursuing our study support
initiative for staff working towards full or part-time study
programs.
In addition, we have new intakes in our national students’
sponsorship program in 2022, students being developed to
be the next generation bankers offering academic support,
internships and experience enriched careers.
Management Review of Operations continued
Jassim Al Thani
EGM, Chief Human Capital Officer
ANNUAL REPORT 2022
59
The Ministry of Labor honored Commercial Bank during the awarding
ceremony for distinguished private sector institutions in the field of Qatarization
during 2022
Compensation and benefits
The Board of Directors regularly reviews compensation and
benefits to ensure we pay fairly and competitively, reward
high performers, and link incentive payments to the overall
performance of the Bank. The Board of Directors also
focuses on risk management by considering:
• The split between salary and incentives.
• The balance between profit, risk and the time horizons
associated with those risks.
We disclose our remuneration policies and practices in our
financial reports.
Human Capital operations
Newly intake in 2022: Commercial Bank has successfully
attracted skilled and competent new graduate nationals
across various strategic business units. These employees
have been able to contribute significantly and successfully
towards the Bank’s strategic goals.
Moreover, focusing on world-class experiences, Commercial
Bank successfully attracted global new key talents and
leaders to accelerate its strategic vision, with technology and
customer focus in mind.
Developing our nationals is one of our strategic pillars.
Through experience and knowledge transfer, we have
promoted new national leaders from our talent pool.
Operations
2022 was a standout year for Qatar, distinguished by the
very successful hosting of the FIFA World Cup. Preparations
at the national level lent wings to Commercial Bank’s
ongoing digitization agenda, which is core to the bank’s
strategy, corporate earnings, and customer experience. Not
surprisingly, digitization in financial services for such a major
event was particularly focused in the payments domain,
however there were notable innovations in other areas.
Building on this pace of digitization required continuous
adaptation and innovation. In 2022, Commercial Bank
continued to design and execute to: support increased
client preferences for engaging on mobile devices, including
utilizing technologies facilitated by mobile devices (e.g.
biometric authentication); proactively enhance products,
and services offered digitally; and broaden self-service and
service-on-demand distribution channels. Reflecting its 5C’s
strategy, Commercial Bank has been at the forefront of these
trends. The flexibility of our operating model allowed us to
drive rapid innovation and work to provide enhanced client
experience.
Increasing client preference for engaging via mobile
devices
Clients continued to embrace mobile devices to engage with
Commercial Bank. For individual customers, over the course
of 2022, active digital users increased by 18%. Of these,
mobile usage represented more than 95% of all digital
transactions. Exploitation of technology readily delivered
by mobile devices, particularly biometric registrations,
increased by 22%. For corporate clients, both online and
mobile banking solutions came to play an increasingly
important role. Clients accessing banking services via
mobile devices increased by 20% over 2021. Importantly,
there was 20% growth in business owners and decision
makers availing of solutions provided by Commercial Bank to
approve transactions on mobile devices. This demonstrates
the value placed by clients on the enhanced convenience,
security and flexibility of these solutions.
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Enhancing products and services offered online
Enhancing the range of services available both online and via
mobile was a key priority for the year. The suite of available
payment solutions were broadened including Google Pay
and Samsung Wallet, to supplement the existing CB Pay
and Apple Pay products, along with the very popular 60
Second Remittance product. Commercial Bank also made
a significant investment to upgrade our highly appreciated
Mobile Banking application, bringing stronger foundations
for an omni-channel experience, richer client information,
broader functionality and greater ease of use.
Bespoke solutions were also created for corporate clients
also seeking to extend their digital reach and service
proposition, including several B2C solutions, such as those
facilitating utility and other payments.
Broadening of self-service and distribution channels
Consistent with the opportunity to access banking
information, and to fulfill their banking needs on a 24*7 basis,
Commercial Bank also extended the range of outlets and
channels available to clients. These include more kiosks for
printing of ATM Cards and Credit Cards, on demand. Availing
of these kinds of solutions also requires excellence in design
and in communication to enable clear, simple banking. These
areas were also a focus of the year, including via: enhanced
data analytics capability, and increased personalization
through the deepening use of client data.
Solutions driven by sustained investments in strategic
capability
Digital solutions provide the customer with convenient,
fast and efficient products and services, while allowing
Commercial Bank to automate processing end-to-end.
At Commercial Bank, we are cognizant that changes in
the market, in client needs and in opportunities can be
highly dynamic. Therefore, we have created a world-class,
agile technology capability with the ability to deliver digital
scalable, automated, innovations at speed.
Key components to the strategy include:
• A highly capable diverse team;
• An agile delivery process;
• A scalable technology infrastructure, protected by strong
cyber security capability;
• Proactive investment in data infrastructure, data solutions
and data science capabilities.
Commercial Bank has strong flexible infrastructure and agile
innovation capability that is foundational to its strategy.
Management Review of Operations continued
Leonie Ruth Lethbridge
EGM, Chief Operating Officer
ANNUAL REPORT 2022
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Internet
Mobile
5%
95%
2022
43%
57%
2016
30%
70%
2017
17%
83%
2018
12%
88%
2019
10%
90%
2020
6%
94%
2021
Internet Banking vs. Mobile Banking
Biometric Registrations (in thousands)
2017
2018
2019
2020
2022
2021
100%
25%
58%
22%
28%
35%
Registrations (in thousands)
We would also like to thank His Excellency the Prime Minister
and Minister of the Interior, His Excellency the Minister
of Finance, the Qatar Central Bank and the Ministry of
Commerce and Industry for their continued guidance and
support of the Bank throughout this past year.
The Qatar Central Bank, under the leadership of His
Excellency the Governor Sheikh Bandar bin Mohammed
bin Saoud Al-Thani, has shown prudence with clear and
consistent leadership of the banking industry enabling
Qatar’s financial sector to prosper. We are very proud of our
success over the years and are optimistic about what the
future will bring for Commercial Bank and for Qatar.
Acknowledgement
Commercial Bank’s successful business performance in
2022 has only been possible through the dedication and
hard work of our valued employees and the leadership team.
We are also extremely grateful for the ongoing support and
guidance provided by the Chairman, Vice Chairman and
Managing Director and Members of the Board. Under their
leadership, we have continued to achieve growth and have
maintained our reputation of being one of Qatar’s oldest and
most successful banks for more than four decades.
In conclusion, we would like to express our sincere gratitude
to His Highness Sheikh Tamim Bin Hamad Al Thani, Amir of
the State of Qatar, for his visionary leadership of Qatar.
To Know
The Score
In 2022 we practiced like champions, we went forward
and we lead digital transformation in Qatar.
cbq.qa
64
COMMERCIAL BANK’S CORPORATE GOVERNANCE
REFLECTS OUR COMMITMENT TO COMPLY WITH
LOCAL REGULATIONS AND INTERNATIONALLY
ACCEPTED STANDARDS INCLUDING TRANSPARENT
DISCLOSURE FOR THE BEST INTERESTS OF OUR
STAKEHOLDERS.
Effective governance is, at its core, simply about doing the
right things for stakeholders. It is enabled by having the
right checks and balances throughout the organization to
ensure that the right things are always done. It comprises
the processes and structures which affect the way an
organization is directed, managed and monitored and
its activities are reported, including: the elements of
internal control, ethics, various risk functions, policies
and procedures, internal audit, external audit and formal
committees that promote greater transparency and facilitate
efficient and effective management for the best interests of
stakeholders.
The Board of Directors firmly believes that good Corporate
Governance is fundamental in ensuring the proper
management of Commercial Bank in the interests of all of
our stakeholders. We recognise that the way we interact with
stakeholders is key for the success of our business and the
transparent disclosure of our governance assists investors in
their investment decisions.
Corporate Governance developments
During 2022, we continued to enhance our Corporate
Governance practices as the Bank’s business evolves and
regulatory requirements change. Change was primarily
driven by compliance with the amendments made to the
Corporate Governance Instructions issued by Qatar Central
Bank under Circular No. 25 of 2022. Shareholders approved
at an Extraordinary General Assembly on 24 October
amendments to the Bank’s Articles of Association to comply
with changes to the QCB Corporate Governance Instructions
and other general amendments. The Bank’s Board
Committees structure was revised, with the Compliance
Committee’s duties transferred from the Board Audit &
Compliance Committee to the Board Risk Committee (to
become the Board Risk & Compliance Committee). The
Board Credit Committee and the Board Policy & Strategy
Committee were combined to become the Board Executive
Committee.
Commercial Bank’s Corporate Governance Charter, Board
of Directors Charter, Board Committees Charter, Board
Delegation of Authority, Board Remuneration Policy,
Corporate Affairs Policy and the Bank’s Policy relating to
Board Membership and Selection Criteria were all reviewed
and updated for alignment with the QCB Corporate
Governance Instructions and changes to the Bank’s
business. In line with the State of Qatar’s commitment to
address key ESG issues and with the Qatar National Vision
2030, Commercial Bank disclosed our first full Sustainability
Report during 2022.
Corporate Governance
ANNUAL REPORT 2022
65
Corporate Governance framework
The Board understands that sound Corporate Governance
principles and practices are fundamental to maintaining
the trust of its stakeholders, which is also critical in business
growth, sustainability and profitability.
The Board is committed to implement the corporate
governance principles of justice, equality among
stakeholders without discrimination, transparency and
disclosure, while upholding the values of corporate social
responsibility and acting in the public interest of Commercial
Bank and stakeholders over their personal interests, as well
as performing their duties, tasks and functions in good faith,
integrity, honour and sincerity.
The implementation of these principles is driven by a
qualified Board aided by a seasoned and experienced
Executive Management team. The Board ensures that the
Bank adheres to these Corporate Governance principles in
its day-to-day activities at all times.
Refer to “Board of Directors” section in the Annual Corporate
Governance Report for further information.
Commercial Bank’s Code of Conduct provides a clear
statement of our conduct expectations and ethical values,
supported by our conduct and ethics standards.
Refer to “Code of Conduct” section in the Annual Corporate
Governance Report for further information.
Our governance includes a committee structure and
a comprehensive set of corporate policies which are
developed, reviewed and approved by the Board, the
respective Board Committees, the Group CEO, CRO, and the
board of directors of the Bank’s subsidiaries, in accordance
with their respective responsibilities and levels of authority.
Refer to “Board of Directors” and “Board Committees”
sections in the Annual Corporate Governance Report for
further information.
The Board of Directors regularly reviews compensation and
benefits to ensure we pay fairly and competitively, reward
high performers, and link incentive payments to the overall
performance of the Bank. The Board of Directors also
focuses on risk management by considering:
• The mix between salary and incentives;
• The balance between profit, risk and the time horizons
associated with those risks;
• Linking a portion of senior employees’ bonuses directly to
the long-term performance of Commercial Bank, and to
shareholders’ interests;
• Align with global best practices.
Refer to “Directors’ Remuneration”, “Executive Management
Remuneration”, “Directors Remuneration Policy” and
“Remuneration Policy Principles” sections in the Annual
Corporate Governance Report for further information.
cbq.qa
66
The main rules, procedures and practical application of
Commercial Bank’s governance are contained in the Bank’s
Corporate Governance Charter, Board of Directors Charter
and Board Committees Charter. These charters reflect
Commercial Bank’s long-standing ethical governance
practices and the regulatory requirements mandated by:
• instructions issued by the Qatar Central Bank on 30
August 2022 by virtue of Circular No. 25/2022 (QCB
Corporate Governance Instructions);
• the Commercial Companies Law promulgated by Law No.
11 of 2015, as amended by Law No.8 of 2021 (CCL); and
• the Governance Code for Companies and Legal Entities
Listed on the Main Market issued by Qatar Financial
Markets Authority pursuant to Decision No. 5 of 2016
(QFMA Corporate Governance Code).
These charters also follow the recommendations of
international best practice for Corporate Governance
developed by leading international frameworks.
Complying with rules and regulations
We fully adhere to the principles set out in the QCB
Corporate Governance Instructions and to the provisions of
the QFMA Corporate Governance Code as at 31 December
2022.
The detailed Annual Corporate Governance Report 2022
is an attachment to this Annual Report, forms an integral
part of it, and is presented to shareholders for approval at
the Bank’s AGM in 2023. The Annual Corporate Governance
Report 2022 can also be viewed on Commercial Bank’s
website at www.cbq.qa
Corporate Governance continued
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2022
cbq.qa
68
Independent Auditor’s Report
To the Shareholders of The Commercial Bank (P.S.Q.C.)
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of The Commercial Bank (P.S.Q.C.) (the “Bank”) and its subsidiaries
(together referred to as the “Group”), which comprise the consolidated statement of financial position as at 31 December 2022,
and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2022, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the
consolidated financial statements in the State of Qatar, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current year. These matters where addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the
basis for our audit opinion on the accompanying consolidated financial statements.
ANNUAL REPORT 2022
69
Report on the audit of the consolidated financial statements (continued)
Key audit matters (continued)
Key audit matter
How our audit addressed the key audit matter
1. Impairment of loans and advances to customers
The process of estimating Expected Credit Losses (ECL) on
credit risk associated with loans and advances in accordance
with IFRS 9 Financial instruments (IFRS 9) involves complexity
and significant judgement.
COVID-19 pandemic and the regulatory payment holidays
associated with it have impacted the management
determination of the ECL as they increased the level of
uncertainty associated with the management judgement,
which may result in outputs significantly different from the
future credit losses and staging of the customers.
IFRS 9 requires use of the ECL model for the purposes of
calculating impairment provision. Due to the complexity of
requirements under IFRS 9, significance of judgements
applied and the Group’s exposure to loans and advances
forming a major portion of the Group’s assets, the audit of
ECL for loans and advances is a key audit matter.
As at 31 December 2022, the Group’s gross loans and
advances amounted to QR 102,516 million and the related
allowances for impairment amounted to QR 5,320 million,
comprising QR 1,742 million of ECL against Stage 1 and 2
exposures and QR 3,578 million against exposures classified
under Stage 3.
The basis of calculation of ECL is presented in the summary
of significant accounting policies and notes 4(b) and 10 to the
consolidated financial statements.
Our audit approach included testing the controls associated
with the relevant processes for estimating the ECL and
performing substantive procedures on such estimates. We
involved our internal specialist where their specific expertise
was required. Our key audit procedures were as follows:
• We obtained understanding of the Group’s ECL policy
and the design of the controls and tested the design and
operating effectiveness of relevant controls and
governance around it.
• We assessed:
• the Group’s ECL policy including the criteria of
staging and significant increase in credit risk with the
requirements of IFRS 9, considering the regulatory
guidelines to address the COVID-19 pandemic;
• the Group’s forward-looking economic variables by
comparing them on a sample basis against
supporting evidences, where applicable;
• the reasonableness of changes made to the
economic scenarios to reflect the effect of COVID-19;
and
• the basis of determination of the management
overlays considering the impact of the COVID-19
global pandemic against the requirements of the
Group’s ECL policy and guidance issued by the
regulator.
• We have checked the completeness of the data used as
input for the ECL model and the mathematical accuracy
through the model processes.
• For a sample of exposures, we performed procedures to
evaluate:
• appropriateness of exposure at default, probability
of default and loss given default in the calculation of
ECL;
• timely identification of exposures with a significant
increase in credit risk and appropriateness of the
Group’s staging; and
• the ECL calculation.
cbq.qa
70
Report on the audit of the consolidated financial statements (continued)
Key audit matters (continued)
Key audit matter
How our audit addressed the key audit matter
1. Impairment of loans and advances to customers
(continued)
• Assessed the impairment allowance for individually
impaired loans and advances (stage 3) in accordance
with IFRS 9.
• Assessing the adequacy of the Group’s disclosures in
relation to IFRS 9 by reference to the requirements of the
relevant financial reporting standards.
2. Impairment of investments in associates
The determination of recoverable amounts of the Group’s
investments in associates relies on management’s estimates
of future cash flows and their judgment with respect to the
associates’ performance. Due to the uncertainty of
forecasting and discounting future cash flows, the level of
management’s judgement involved and the significance of
the Group’s investment in associates, this audit area is
considered as a key audit matter.
As at 31 December 2022, the Group’s investment in
associates amounted to QR 3,094 million. Refer to the
significant accounting policies and note 12 to the consolidated
financial statements.
Our audit procedures focused on the following key areas:
• We obtained the calculation of recoverable amounts of
the Group’s investments in associates.
• With the assistance of our own specialists, we assessed
the assumptions and compared the estimates used to
externally available industry, economic and financial data
and methodologies used by the management to
determine the recoverable amount of the investments in
associates.
• We assessed the forecasts of future cash flows prepared
by management.
• Discussions with management on the performance of
the associates and their future outlook.
Other information
Other information consists of the information included in the Group’s annual report (the “Annual Report”), other than the
Group’s consolidated financial statements and our auditor’s report thereon. Management is responsible for the other
information. The Group’s 2022 Annual Report is expected to be made available to us after the date of this auditor’s report. Our
opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
Independent Auditor’s Report continued
ANNUAL REPORT 2022
71
Report on the audit of the consolidated financial statements (continued)
Responsibilities of the management and the Board of Directors for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRSs, and for such internal control as the management determines is necessary to enable the preparation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of user taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout
the audit. We also:
• Identify and assess the risk of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosure is
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
cbq.qa
72
Report on the audit of the consolidated financial statements (continued)
Auditor’s responsibilities for the audit of the consolidated financial statements (continued)
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosures about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
We have obtained all the information and explanations, which we considered necessary for the purpose of our audit. We confirm
that we are not aware of any contraventions by the Bank of its Articles of Association and the amendments thereto, the Qatar
Commercial Companies Law No. 11 of 2015, whose certain provisions were subsequently amended by Law No.8 of 2021, during
the financial year that would have had a material adverse effect on the Group’s consolidated financial position or performance as
at and for the year ended 31 December 2022.
Ahmed Sayed
of Ernst & Young
Qatar Auditors Registry Number 326
Doha - State of Qatar
Date: 16 February 2023
Independent Auditor’s Report continued
ANNUAL REPORT 2022
73
Consolidated Statement of
Financial Position
QAR ‘000s
As at 31 December
Notes
2022
2021
ASSETS
Cash and balances with central banks
8
8,030,334
17,915,385
Due from banks
9
20,843,798
10,942,011
Loans and advances to customers
10
98,016,182
98,003,163
Investment securities
11
29,835,260
26,722,691
Investment in associates and a joint arrangement
12
3,101,753
2,961,240
Property and equipment
13
3,050,360
2,753,339
Intangible assets
14
66,040
75,375
Other assets
15
6,176,856
6,090,977
TOTAL ASSETS
169,120,583
165,464,181
LIABILITIES
Due to banks
16
24,054,014
17,776,904
Customer deposits
17
83,167,492
81,958,484
Debt securities
18
10,714,316
15,285,788
Other borrowings
19
15,941,527
15,718,753
Other liabilities
20
9,723,904
10,651,030
TOTAL LIABILITIES
143,601,253
141,390,959
EQUITY
Share capital
21
4,047,254
4,047,254
Legal reserve
21
9,877,879
9,875,823
General reserve
21
26,500
26,500
Risk reserve
21
2,274,574
2,131,459
Fair value reserve
21
(367,035)
392,230
Foreign currency translation reserve
21
(2,690,920)
(2,845,211)
Other reserves
21
884,977
684,027
Revaluation reserve
21
1,082,336
1,018,411
Retained earnings
4,563,762
2,922,719
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
19,699,327
18,253,212
Non-controlling interests
3
10
Instruments eligible for additional capital
21
5,820,000
5,820,000
TOTAL EQUITY
25,519,330
24,073,222
TOTAL LIABILITIES AND EQUITY
169,120,583
165,464,181
The consolidated financial statements were approved by the Board of Directors on 24 January 2023 and were signed on its
behalf by:
Sheikh Abdulla Bin Ali Bin Jabor Al Thani
Mr. Hussain Ibrahim Alfardan
Mr. Joseph Abraham
Chairman
Vice Chairman
Group Chief Executive Officer
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
cbq.qa
74
QAR ‘000s
For the year ended 31 December
Notes
2022
2021
Interest income
24
7,472,957
6,012,448
Interest expense
25
(3,366,948)
(2,310,919)
Net interest income
4,106,009
3,701,529
Fee and commission income
26
1,341,346
1,322,978
Fee and commission expense
27
(551,386)
(395,187)
Net fee and commission income
789,960
927,791
Net foreign exchange gain
28
415,341
309,362
Net (loss) / income from investment securities
29
(141,335)
24,907
Other operating income
30
124,024
137,121
Net operating income
5,293,999
5,100,710
Staff costs
31
(595,181)
(947,021)
Depreciation
13
(232,897)
(213,354)
Amortization of intangible assets
14
(69,285)
(58,850)
Other expenses
32
(240,718)
(260,343)
Operating expenses
(1,138,081)
(1,479,568)
Operating profit
4,155,918
3,621,142
Net impairment losses on investment securities
(11,422)
(2,377)
Net impairment losses on loans and advances to customers
10
(987,609)
(1,099,419)
Net impairment (losses)/reversals on other financial assets
(148,654)
22,485
Impairment on investment in an associate
12
-
(291,000)
Other provisions
(115,696)
(67,226)
2,892,537
2,183,605
Net monetary losses due to hyperinflation
(189,380)
-
Profit before share of results of associates and a joint arrangement
2,703,157
2,183,605
Share of results of associates and a joint arrangement
12
222,296
129,254
Profit before tax
2,925,453
2,312,859
Income tax expense
33
(114,345)
(8,605)
Profit for the year
2,811,108
2,304,254
Attributable to:
Equity holders of the bank
2,811,108
2,304,253
Non-controlling interests
-
1
Profit for the year
2,811,108
2,304,254
Earnings per share
Basic/diluted earnings per share (QAR)
34
0.62
0.50
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
Consolidated Statement of Income
ANNUAL REPORT 2022
75
QAR ‘000s
For the year ended 31 December
Note
2022
2021
Profit for the year
2,811,108
2,304,254
Other comprehensive income for the year:
Items that are, or may be subsequently reclassified to profit or loss:
Foreign currency translation differences from foreign operation
22
(2,135,828)
(610,104)
Share of other comprehensive loss income of investment in associates and
a joint arrangement
22
(64,370)
(6,309)
Net movement in cash flow hedges-effective portion of changes in fair
value
22
(162,708)
59,629
Net change in fair value of investments in debt securities designated at
FVOCI :
22
Net change in fair value
(782,712)
(440,466)
Net amount transferred to consolidated statement of income
(39)
(597)
Items that may not be subsequently reclassified to profit or loss:
Net change in fair value of equity investments designated at FVOCI
22
424,246
(235,569)
Share of other comprehensive income of investment in associates and a
joint arrangement
22
3,933
15,241
Gain / (Loss) on revaluation on land and buildings
63,925
(269,158)
Hyperinflation impact
2,290,119
-
Other comprehensive loss for the year
(363,434)
(1,487,333)
Total comprehensive income for the year
2,447,674
816,921
Attributable to:
Equity holders of the bank
2,447,674
816,920
Non-controlling interests
-
1
Total comprehensive income for the year
2,447,674
816,921
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
Consolidated Statement of
Comprehensive Income
cbq.qa
76
For the year ended 31 December 2022
Notes
Share
Capital
Legal
Reserve
General
Reserve
Risk
Reserve
Fair Value
Reserve
Balance as at 1 January 2022
4,047,254 9,875,823
26,500
2,131,459
392,230
Profit for the year
-
-
-
-
-
Other comprehensive loss
21
-
-
-
-
(581,650)
Total comprehensive income for the
year
-
-
-
-
(581,650)
Transfer to legal reserve
21
-
2,056
-
-
-
Transfer to risk reserve
-
-
-
143,115
-
Transfer to retained earnings upon disposal
of FVOCI equity investments
-
-
-
-
(177,615)
Dividend for instruments eligible for
additional capital
-
-
-
-
-
Net movement in other reserves
-
-
-
-
-
Provision for Sports and Social Activities
Support Fund
23
-
-
-
-
-
Transactions with equity holders,
recognised directly in equity
Contributions by and distributions to
equity holders of the bank:
Dividends for the year 2021
21
-
-
-
-
-
Total contributions by and distributions
to equity holders of the bank
-
-
-
-
-
Net movement in non-controlling interests
-
-
-
-
-
Balance as at 31 December 2022
4,047,254 9,877,879
26,500
2,274,574
(367,035)
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
Consolidated Statement of
Changes in Equity
ANNUAL REPORT 2022
77
QAR ‘000s
Foreign
Currency
Translation
Reserve
Other
Reserves
Revaluation
Reserve
Retained
Earnings
Total Equity
Attributable to
Equity Holders
of the Bank
Non-
Controlling
Interests
Instruments
Eligible for
Additional
Capital
Total Equity
(2,845,211)
684,027
1,018,411
2,922,719
18,253,212
10 5,820,000
24,073,222
-
-
-
2,811,108
2,811,108
-
-
2,811,108
154,291
-
63,925
-
(363,434)
-
-
(363,434)
154,291
-
63,925
2,811,108
2,447,674
-
-
2,447,674
-
-
-
(2,056)
-
-
-
-
-
-
-
(143,115)
-
-
-
-
-
-
-
177,615
-
-
-
-
-
-
-
(283,720)
(283,720)
-
-
(283,720)
-
200,950
-
(200,950)
-
-
-
-
-
-
-
(70,278)
(70,278)
-
-
(70,278)
-
-
-
(647,561)
(647,561)
-
-
(647,561)
-
-
-
(647,561)
(647,561)
-
-
(647,561)
-
-
-
-
-
(7)
-
(7)
(2,690,920)
884,977
1,082,336
4,563,762
19,699,327
3 5,820,000
25,519,330
cbq.qa
78
Consolidated Statement of
Changes in Equity continued
For the year ended 31 December 2021
Notes
Share
Capital
Legal
Reserve
General
Reserve
Risk
Reserve
Fair Value
Reserve
Balance as at 1 January 2021
4,047,254
9,871,972
26,500
2,037,236
1,000,301
Profit for the year
-
-
-
-
-
Other comprehensive loss
21
-
-
-
-
(608,071)
Total comprehensive income for the year
-
-
-
-
(608,071)
Transfer to legal reserve
21
-
3,851
-
-
-
Transfer to risk reserve
-
-
-
94,223
-
Expenses on issue of instrument for
additional Tier 1 capital
21
-
-
-
-
-
Issue of instrument for additional Tier 1
capital
-
-
-
-
-
Dividend for Instruments eligible for
additional capital
-
-
-
-
-
Net movement in other reserves
-
-
-
-
-
Provision for Sports and Social Activities
Support Fund
23
-
-
-
-
-
Transactions with equity holders,
recognised directly in equity
Contributions by and distributions to equity
holders of the bank:
Dividends for the year 2020
21
-
-
-
-
-
Total contributions by and distributions to
equity holders of the bank
-
-
-
-
-
Net movement in non-controlling interests
-
-
-
-
-
Balance as at 31 December 2021
4,047,254
9,875,823
26,500
2,131,459
392,230
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
ANNUAL REPORT 2022
79
QAR ‘000s
Foreign
Currency
Translation
Reserve
Other
Reserves
Revaluation
Reserve
Retained
Earnings
Total Equity
Attributable to
Equity Holders
of the Bank
Non-
Controlling
Interests
Instruments
Eligible for
Additional
Capital
Total Equity
(2,235,107)
557,273
1,287,569
1,577,474
18,170,472
9
4,000,000
22,170,481
-
-
-
2,304,253
2,304,253
1
-
2,304,254
(610,104)
-
(269,158)
-
(1,487,333)
-
-
(1,487,333)
(610,104)
-
(269,158)
2,304,253
816,920
1
-
816,921
-
-
-
(3,851)
-
-
-
-
-
-
-
(94,223)
-
-
-
-
-
-
-
(7,899)
(7,899)
-
-
(7,899)
-
-
-
-
-
-
1,820,000
1,820,000
-
-
-
(263,950)
(263,950)
-
-
(263,950)
-
126,754
-
(126,754)
-
-
-
-
-
-
-
(57,606)
(57,606)
-
-
(57,606)
-
-
-
(404,725)
(404,725)
-
-
(404,725)
-
-
-
(404,725)
(404,725)
-
-
(404,725)
-
-
-
-
-
-
-
-
(2,845,211)
684,027
1,018,411
2,922,719
18,253,212
10
5,820,000
24,073,222
cbq.qa
80
QAR ‘000s
For the year ended 31 December
Notes
2022
2021
Cash flows from operating activities
Profit before tax
2,925,453
2,312,859
Adjustments for:
Net impairment losses on loans and advances to customers
987,609
1,099,419
Net impairment losses on investment securities
11,422
2,377
Net impairment losses / (reversals) on other financial assets
148,654
(22,485)
Depreciation
13
232,897
213,354
Amortization of intangible assets and transaction costs
102,624
94,971
Net loss / (income) from investment securities
179,164
(14,999)
Other provisions
115,696
67,226
Loss on disposal of property and equipment
-
13,373
Net monetary losses due to hyperinflation
189,380
-
Impairment on investment in an associate
-
291,000
Share of results of associates and a joint arrangement
12
(222,296)
(129,254)
Operating profit before working capital changes
4,670,603
3,927,841
Working capital changes
Change in due from banks
(5,447,296)
(1,238,892)
Change in loans and advances to customers
(3,313,565)
(8,437,435)
Change in other assets
(280,288)
(579,760)
Change in due to banks
6,329,390
(2,255,294)
Change in customer deposits
3,335,135
11,434,631
Change in other liabilities
(463,695)
3,046,088
Contribution to social and sports fund
(57,606)
(32,530)
Net cash flows from operating activities
4,772,678
5,864,649
Cash flows from investing activities
Acquisition of investment securities
(10,232,133)
(8,981,399)
Dividend received from associates and a joint arrangement
12
21,346
2,500
Proceeds from sale/maturity of investment securities
5,274,969
5,278,171
Acquisition of property and equipment and intangible assets
(308,348)
(200,589)
Proceeds from the sale of property and equipment and other assets
21,743
173
Net cash flows used in investing activities
(5,222,423)
(3,901,144)
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
Consolidated Statement
of Cash Flows
ANNUAL REPORT 2022
81
The attached notes 1 to 39 form an integral part of these consolidated financial statements.
QAR ‘000s
For the year ended 31 December
Notes
2022
2021
Cash flows from financing activities
Proceeds from issue of debt securities
18
1,050,165
8,831,102
Repayment of debt securities
18
(5,342,627)
(6,642,025)
Repayment of other borrowings
19
(7,374,297)
(9,841,975)
Proceeds from other borrowings
19
8,151,786
12,308,391
Proceeds from issue of additional Tier 1 note
-
1,820,000
Payment of Lease Liability
(117,727)
(105,160)
Payment on Coupon of instrument eligible for additional Tier 1 Capital
(283,720)
(263,950)
Dividends paid
(647,561)
(404,725)
Net cash flows (used in) / from financing activities
(4,563,981)
5,701,658
Net (decrease) / increase in cash and cash equivalents
(5,013,726)
7,665,163
Effect of exchange rate fluctuation
353,006
773,956
Cash and cash equivalents as at 1 January
18,961,084
10,521,965
Cash and cash equivalents at the end of the year
36
14,300,364
18,961,084
Net cash flows from interest and dividend from operating activities:
Interest paid
2,894,563
2,423,807
Interest received
7,698,391
5,798,476
Dividend received
37,829
9,609
Consolidated Statement
of Cash Flows continued
cbq.qa
82
1. REPORTING ENTITY
The Commercial Bank (P.S.Q.C.) (the “Bank”) is an entity domiciled in the State of Qatar and was incorporated in 1974 as a
public shareholding company under Emiri Decree No.73 of 1974. The commercial registration number of the Bank is 150.
The address of the Bank’s registered office is PO Box 3232, Doha, State of Qatar. The consolidated financial statements of
the Bank comprise the Bank and its subsidiaries (together referred to as the “Group”). The Group is primarily engaged in
conventional banking, brokerage services and the credit card business and operates through its head office, branches and
subsidiaries.
Subsidiaries of the Group are as follows:
Name of subsidiary
Country of
incorporation
Capital of the
subsidiary
Activity of the
subsidiary
Percentage of
ownership
2022
2021
Alternatifbank A.S.
Turkey
TRY 2,213,740,000
Banking services
100%
100%
Commercial Bank Financial
Services L.L.C.
Qatar
QAR 700,000,000
Brokerage services
100%
100%
CBQ Finance Limited
Bermuda
US$ 1,000
Debt issuance for the
Bank
100%
100%
CB Global Trading Limited
Cayman Islands
US$ 1
Financial services
100%
100%
CB Innovation Services L.L.C.
Qatar
QAR 3,640
Management
services
100%
100%
CB Asset Management L.L.C.
Qatar
QAR 50,000,000
Wealth Management
100%
100%
CB Leasing Company L.L.C.
Qatar
QAR 50,000,000
Leasing
100%
100%
Orient 1 Limited
Bermuda
US$ 20,000,000
Financial services-
(Inactive)
100%
100%
CB Real Estate Properties
L.L.C.
Qatar
QAR 1,000
Advisory services-
(Inactive)
100%
100%
CB Global Limited
Cayman Islands
US$ 1
Financial services-
(under liquidation)
100%
100%
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) issued by the International Accounting Standards Board (“IASB”).
The Group presents its consolidated statement of financial position broadly in the order of liquidity. An analysis regarding
recovery or settlement of assets/liabilities within twelve months after the end of the reporting date (“current”) and more
than twelve months after the reporting date (“non-current”) is presented in Note 4(c) (iii).
Notes to the Consolidated
Financial Statements
As at and for the year ended 31 December 2022
QAR ‘000s
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
83
2. BASIS OF PREPARATION (continued)
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following assets and
liabilities that are measured at fair value:
•
derivative financial instruments;
•
investments measured at fair value through profit or loss (‘FVTPL’);
•
other financial assets designated at fair value through profit or loss (‘FVTPL’);
•
financial investment measured at fair value through other comprehensive income (‘FVOCI’);
•
land and buildings; and
•
the carrying values of recognized assets and liabilities that are hedged items in quantifying fair value hedges, and
otherwise carried at amortized cost, are adjusted to record changes in fair value attributable to the risks that are being
hedged.
(c) Functional and presentation currency
These consolidated financial statements are presented in Qatari Riyals (“QAR”), which is the Bank’s functional and
presentation currency. Except as otherwise indicated, financial information presented in QAR has been rounded to the
nearest thousand.
(d) Use of estimates and judgments
The preparation of the consolidated financial statements in conformity with IFRS and QCB regulations requires management
to make judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that
have the most significant effect on the amounts recognized in the consolidated financial statements are described in Note
5.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by the Group entities.
(a) New standards, amendments and interpretations
New standards, amendments and interpretations effective from 1 January 2022
The following standards, amendments and interpretations, which became effective as of 1 January 2022, are relevant to the
Group:
COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
Annual Improvements to IFRS Standards 2018 – 2020
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3)
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
84
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) New standards, amendments and interpretations (continued)
Standards issued but not yet effective
A number of standards and amendments to standards are issued but not yet effective and the Group has not adopted
these in the preparation of these consolidated financial statements. The below standards may have a significant impact on
the Group’s consolidated financial statements, however, the Group is currently evaluating the impact of these new standards.
The Group will adopt these new standards on the respective effective dates.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
1 January 2023
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
1 January 2023
Definition of Accounting Estimate (Amendments to IAS 8)
1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
1 January 2023
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
Deferred indefinitely
Adoption of IAS 29 - Hyperinflation accounting
IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of an entity whose
functional currency is that of a hyperinflationary economy be stated in the measuring unit currency at the reporting period
end. IAS 29 provides certain qualitative and quantitative guidelines to determine the existence of a hyperinflationary
economy. Accordingly, hyperinflation shall be deemed to exist where the last three years’ cumulative inflation approaches
or exceeds 100%.
With the effect from 30 June 2022, the Turkish economy is considered to be hyperinflationary in accordance with the criteria
in IAS 29. This requires purchasing power adjustment to the carrying values of the non-monetary assets and liabilities and
to items in the consolidated statement of comprehensive income with respect to subsidiaries of the Group operating in
Turkey.
On the application of IAS 29 the Bank used the conversion factor derived from the consumer price index (“CPI”) in Turkey.
The CPIs and corresponding conversion factors are since 2005 when Turkey previously ceased to be considered
hyperinflationary.
The index and corresponding conversion factors are as follows:
CPI Conversion Factors
31 December 2021
686.95
1.64
30 June 2022
977.90
1.15
31 December 2022
1,128.45
1.00
Monetary assets and liabilities are not restated because they are already expressed in terms of the monetary unit current.
Non-monetary assets and liabilities are restated by applying the relevant index from the date of acquisition or initial
recording and are subject to impairment assessment with the guidance in the relevant IFRS. The components of
shareholders’ equity are restated by applying the applicable general price index from the dates when components were
contributed or otherwise arose.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
85
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) New standards, amendments and interpretations (continued)
Adoption of IAS 29 - Hyperinflation accounting (continued)
All items in the statement of income are restated by applying the relevant conversion factors, except for restatement of
certain specific income statement items which arise from the restatement of non-monetary assets and liabilities like
amortization and gain or loss on sale of fixed assets.
The gain or loss on the net monetary position is the result of the effect of general inflation and is the difference resulting
from the restatement of non-monetary assets, liabilities, shareholders’ equity and income statement items. The gain or loss
on the net monetary position is included in the statement of income.
Pursuant to IAS 21 ‘The effects of changes in Foreign Exchange Rates’ the Bank as Group has not restated its comparatives
as previous reporting was already in a stable currency.
The cumulative impact for the adjustment of the historical carrying values of non-monetary assets, liabilities and various
item of equity for the previous years is amounting to QAR 1.2 billion reflected through other comprehensive income.
(b) Basis of consolidation
(i) Business combination
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such
re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognised in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive income. Contingent
consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within
equity.
The excess of the consideration transferred of any non-controlling interest and the acquisition-date fair value of any
previous equity interest over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognised and previously held interest measured is less than the
fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised
directly in the consolidated statement of income.
Transaction costs are expensed as incurred, except if they are related to the issue of debt or equity securities.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
86
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Basis of consolidation (continued)
(ii) Non-controlling interests (NCI)
In accordance with IFRS 3, for each business combination, the acquirer can measure, at the acquisition date,
components of NCI in the acquired business that represent ownership interests and entitle its holders to a proportionate
share of the entity’s net assets in the event of liquidation at either:
(a) fair value on the acquisition date; or
(b) the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable
net assets.
NCI is measured only on initial recognition. The Group measures the NCI at fair value, including its share of goodwill.
(iii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an investee if it is exposed to, or has rights to,
variable returns from its involvement with the investee and has the ability to affect those returns through its power over
the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the
date on which control commences until the date when control ceases.
The accounting policies of subsidiaries are consistent with the accounting policies adopted by the Group.
(iv) Transactions eliminated on consolidation
Intra-group balances, and income and expenses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
(v) Associates and joint arrangements
Associates and joint arrangements are entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates and joint arrangements are accounted for by the equity method of accounting and are
initially recognised at cost (including transaction costs directly related to acquisition of investment in associates and
joint arrangement). The Group’s investment in associates and joint arrangements includes goodwill (net of any
accumulated impairment loss) identified on acquisition.
The Group’s share of its associates’ and joint arrangement’s post-acquisition profits or losses is recognised in the
consolidated statement of income; its share of post-acquisition reserve movements is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the
Group’s share of losses in an associates and joint arrangements equals or exceeds its interest in the associates and joint
arrangements, including any other unsecured receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associates and joint arrangement.
The Bank performs impairment assessment of investment in associates on an annual basis. Impairment testing involves
calculating the value in use (VIU) by estimating the present values of future cash flows based on management’s
estimates of future earnings available to ordinary shareholders and observable market inputs. Where the carrying
amount exceeds the VIU, an impairment would be recognized in the statement of income and the carrying amount will
be reduced.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
87
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Basis of consolidation (continued)
(v) Associates and joint arrangements (continued)
Intergroup gains on transactions between the Group and its associates and joint arrangement are eliminated to the
extent of the Group’s interest in the associates and joint arrangements. Intergroup losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Associates’ financial statements are being prepared using similar accounting policies and period end as the parent.
(vi) Funds management
The Group manages and administers assets held in unit trusts and other investment vehicles on behalf of investors.
The financial statements of these entities are not included in these consolidated financial statements except when the
Group controls the entity. Information about the Group’s funds management is set out in Note 38.
(c) Foreign currency
(i) Foreign currency transactions and balances
Foreign currency transactions that require settlement in a foreign currency are translated into the respective functional
currencies of the operations at the spot exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional
currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that
the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date of the transaction.
Foreign currency differences resulting from the settlement of foreign currency transactions and arising on translation
at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
(ii) Foreign operations
The results and financial position of all the Group’s entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
-
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the
reporting date;
-
Income and expenses for each statement of income are translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions); and
-
All resulting exchange differences are recognised in other comprehensive income.
Exchange differences arising from the above process are reported in equity and NCI as ‘foreign currency translation
reserve’.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
88
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Foreign currency (continued)
(ii) Foreign operations (continued)
When the Group has any foreign operation that is disposed of, or partially disposed of, such exchange differences are
recognised in the consolidated statement of income as part of the gain or loss on sale. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely
in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form
part of the net investment in the foreign operation and are recognised in other comprehensive income, and presented
in the foreign exchange translation reserve in equity.
(d) Financial assets and financial liabilities
(i) Recognition and initial measurement
The Group initially recognises loans and advances to customers, due from / to banks, customer deposits, debt
securities and other borrowings on the date at which they are originated. All other financial assets and liabilities are
initially recognised on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
(ii) Classification
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost, FVOCI or FVTPL.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at
FVTPL:
•
The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as at
FVTPL:
•
The asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces
an accounting mismatch that would otherwise arise.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
89
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(ii) Classification (continued)
Business model assessment
The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level
because this best reflects the way the business is managed and information is provided to management. The
information considered includes:
•
The stated policies and objectives for the portfolio and the operation of those policies in practice.
•
How the performance of the portfolio is evaluated and reported to the Group’s management;
•
The risks that affect the performance of the business model (and the financial assets held within that business
model) and how those risks are managed;
•
How managers of the business are compensated.
•
The frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about
future sales activity.
Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are
measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual
cash flows and to sell financial assets.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition.
‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal
amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest (“the SPPI test”), the
Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains
a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this
condition. In making the assessment, the Group considers contingent events that would change the amount and
timing of cash flows, prepayment and extension terms, terms that limit the Group’s claim to cash flows from specified
assets and features that modify consideration of the time value of money.
Reclassifications
Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes
its business model for managing financial assets. The reclassification takes place from the start of the first reporting
period following the change.
Financial liabilities
The Group has classified and measured its financial liabilities at amortized cost.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(iii) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire,
or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred or in which the Group neither transfers nor retains substantially all the risks and rewards
of ownership and it does not retain control of the financial asset. Any interest in transferred financial assets that qualify
for derecognition that is created or retained by the Group is recognised as a separate asset or liability. On derecognition
of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the
portion of the asset transferred), and consideration received (including any new asset obtained less any new liability
assumed) is recognised in profit or loss.
Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not
recognised in the consolidated statement of income on derecognition of such securities.
A financial asset (in whole or in part) is derecognised where:
- the rights to receive cash flows from the asset have expired;
- the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either
(a) the Group has transferred substantially all the risks and rewards of ownership or (b) when it has neither
transferred or retained substantially all the risks and rewards and when it no longer has control over the financial
asset, but has transferred control of the asset.
The Group enters into transactions whereby it transfers assets recognised, but retains either all or substantially all of
the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are
retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all
risks and rewards include, for example, securities lending and repurchase transactions.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
(iv) Modification of financial assets and liabilities
Financial Assets
If the terms of a financial asset are modified, the Group evaluates whether the cash flows of the modified asset are
substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the
original financial asset are deemed to have expired. In this case, the original financial asset is derecognised and a new
financial asset is recognised at fair value, and recalculates a new effective interest rate for the asset. The date of
renegotiation is consequently considered to be the date of initial recognition for impairment calculation purpose,
including for the purpose of determining whether a significant increase in credit risk has occurred.
If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification
does not result in derecognition of the financial asset. In this case, the Group recalculates the gross carrying amount of
the financial asset based on the revised cash flows of the financial assets and recognises the amount arising from
adjusting the gross carrying amount as a modification gain or loss in the consolidated statement of income. If such a
modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together
with impairment losses. In other cases, it is presented as interest income.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(iv) Modification of financial assets and liabilities (continued)
Financial Liabilities
The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are
substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The
difference between the carrying amount of the financial liability extinguished and the new financial liability with modified
terms is recognised in the consolidated statement of income.
(v) Offsetting
Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial
position when, and only when, the Group has a legal right to set off the recognised amounts and it intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising
from a group of similar transactions such as in the Group’s trading activity.
(vi) Measurement principles
•
Amortized cost measurement
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured
at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective
interest method of any difference between the initial amount recognised and the maturity amount, minus any
reduction for impairment loss. The calculation of effective interest rate includes all fees paid or received that are an
integral part of the effective interest rate (EIR).
•
Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous
market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.
When available, the Group measures the fair value of an instrument using the quoted price in an active market for
that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, the Group recognises any change in the fair value, when they have
reliable indicators to support such a change. In such instances the Group may uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen
valuation technique incorporates all of the factors that market participants would take into account in pricing a
transaction.
The fair value of investments in mutual funds and portfolios whose units are unlisted are measured at the net asset
value adjusted for market characteristics reported as at the end of the reporting period.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(iv) Modification of financial assets and liabilities (continued)
•
Fair value measurement (continued)
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price
– i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial
recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active
market for an identical asset or liability nor based on a valuation technique that uses only data from observable
markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between
the fair value at initial recognition and the transaction price. Subsequently, that difference is recognized in profit or
loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported
by observable market data or the transaction is closed out.
If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and
long positions at a bid price and liabilities and short positions at an ask price.
Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are managed
by the Group on the basis of the net exposure to either market or credit risk are measured on the basis of a price
that would be received to sell a net long position (or paid to transfer a net short position) for a particular risk
exposure. Those portfolio-level adjustments are allocated to the individual assets and liabilities on the basis of the
relative risk adjustment of each of the individual instruments in the portfolio.
The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date
on which the amount could be required to be paid.
The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period
during which the change has occurred.
(vii) Expected credit losses (ECL) / Impairment
The Group recognises loss allowances for expected credit losses (ECL) on the following financial instruments that are
not measured at FVTPL:
-
Financial assets that are debt instruments; and
-
Loan commitments and financial guarantee contracts.
No impairment loss is recognised on equity investments.
The Group measures loss allowances at an amount equal to lifetime ECL, except for the following, for which they are
measured as 12-month ECL:
-
debt investment securities that are determined to have low credit risk at the reporting date; and
-
other financial instruments on which credit risk has not increased significantly since their initial recognition
12-month ECL are the portion of ECL that result from default events on financial instruments that are possible with the
12 months after the reporting date.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(vii) Expected credit losses (ECL) / Impairment (continued)
The Group applies three-stage approach to measure expected credit losses (ECL) on financial assets carried at
amortised cost and debt instruments classified as FVOCI. Assets migrate through the following three stages based on
the change in credit quality since initial recognition.
Stage 1: 12 months ECL - not credit impaired Stage 1 includes financial assets on initial recognition and that do not have
a significant increase in credit risk since the initial recognition or that have low credit risk. For these assets, ECL are
recognised on the gross carrying amount of the asset based on the expected credit losses that result from default
events that are possible within 12 months after the reporting date. Interest is computed on the gross carrying amount
of the asset.
Stage 2: Lifetime ECL - not credit impaired Stage 2 includes financial assets that have had a significant increase in credit
risk (SICR) since initial recognition but that do not have objective evidence of impairment. For these assets, lifetime ECL
are recognised, but interest is still calculated on the gross carrying amount of the asset. Lifetime ECL are the expected
credit losses that result from all possible default events over the expected life of the financial instrument.
Stage 3: Lifetime ECL - credit impaired Stage 3 includes financial assets that have objective evidence of impairment at
the reporting date. For these assets, lifetime ECL are recognised.
Measurement of ECL
ECL are a probability-weighted estimate of credit losses. They are measured as follows:
-
Financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the
difference between the cash flows due to the entity in accordance with the contract and the cash flows that the
Group expects to receive);
-
Financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying
amount and the present value of estimated future cash flows;
-
Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are
due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive; and
-
Financial guarantee contracts: the expected payments to reimburse the holder less any amounts that the Group
expects to recover.
Restructured financial assets
If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due
to financial difficulties of the borrower, then an assessment is made of whether the financial asset should be
derecognised and ECL are measured as follows.
- if the expected restructuring will not result in derecognition of the existing asset, then the expected cash flows
arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.
-
if the expected restructuring will result in derecognition of the existing asset, then the expected fair value of the
new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition. This
amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the
expected date of derecognition to the reporting date using the original effective interest rate of the existing
financial asset.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(vii) Expected credit losses (ECL) / Impairment (continued)
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt financial assets
carried at FVOCI are credit impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
-
Significant financial difficulty of the borrower or issuer;
-
A breach of contract such as a default or past due event;
-
The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
-
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
-
The disappearance of an active market for a security because of financial difficulties.
Financial guarantee contracts held
The Group assesses whether a financial guarantee contract held is an integral element of a financial asset that is
accounted for as a component of that instrument or is a contract that is accounted for separately. If the Group
determines that the guarantee is an integral element of the financial asset, then the Group considers the effect of the
protection when measuring the fair value of the financial asset and when measuring ECL.
(e) Cash and cash equivalents
Cash and cash equivalents include notes and coins on hand, unrestricted balances held with central banks and highly liquid
financial assets with original maturities of three months or less from the acquisition date that are subject to an insignificant
risk of changes in their fair value and are used by the Group in the management of its short-term commitments. Cash and
cash equivalents includes amounts due from banks and with an original maturity of 90 days or less. Cash and cash
equivalents are carried at amortised cost in the consolidated statement of financial position.
(f) Loans and advances to customers
Loans and advances to customers are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and that the Group does not intend to sell immediately or in the near term.
Loans and advances to customers are initially measured at the transaction price, which is the fair value plus incremental
direct transaction costs, and subsequently measured at their amortised cost using the effective interest rate method,
except for the financial assets which are classified to be measured at FVTPL, which are measured at fair value with changes
recognised immediately in the consolidated statement of income.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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(g) Investment Securities
The investment securities’ includes:
-
Debt investment securities measured at amortised cost; these are initially measured at fair value plus incremental
direct transaction costs, and subsequently at their amortised cost using the effective interest method;
-
Debt and equity investment securities mandatorily measured at FVTPL or designated as at FVTPL; these are at fair
value with changes recognised immediately in profit or loss;
-
Debt securities measured at FVOCI; and
-
Equity investment securities designated at FVOCI.
For debt securities measured at FVOCI, gains and losses are recognised in OCI, except for the following, which are recognised
in profit or loss in the same manner as for financial assets measured at amortised cost:
-
Interest income using the effective interest method;
-
Expected credit losses and reversals; and
-
Foreign exchange gains and losses
When a debt security measured at FVOCI is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to consolidated statement of income.
The Group elects to present in OCI changes in the fair value of certain investments in equity. The election is made on an
instrument by instrument basis on initial recognition and is irrevocable. Gains and losses on such equity instruments are
never subsequently reclassified to consolidated statement of income, including on disposal. Impairment losses (and
reversal of impairment losses) are not reported separately from other changes in fair value. Dividends, when representing
a return on such investments, continue to be recognised in consolidated statement of income, unless they clearly represent
a recovery of part of the cost of the investment, in which case they are recognised in OCI. Cumulative gains and losses
recognised in OCI are transferred to retained earnings on disposal of an investment.
(h) Derivatives
(i) Derivatives held for risk management purposes and hedge accounting
Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as
trading assets or liabilities. Derivatives held for risk management purposes are measured at fair value. The Group
designates certain derivatives held for risk management as well as certain non-derivative financial instruments as
hedging instruments in qualifying hedging relationships.
The general hedge accounting requirements of IFRS 9 retain the three types of hedge accounting mechanisms in IAS
39. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting,
specifically broadening the types of instruments that qualify as hedging instruments and the types of risk components
of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled
and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is no
longer required.
The Group has also elected to continue to apply the hedge accounting requirements of IAS 39 on adoption of IFRS 9.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) Derivatives (continued)
(i) Derivatives held for risk management purposes and hedge accounting (continued)
Fair value hedges
When a derivative is designated as the hedging instrument in a hedge of the change in fair value of a recognised asset
or liability or a firm commitment that could affect statement of income, changes in the fair value of the derivative are
recognised immediately in statement of income together with changes in the fair value of the hedged item that are
attributable to the hedged risk. If the hedging derivative expires or is sold, terminated, or exercised, or the hedge no
longer meets the criteria for fair value hedge accounting, or the hedge designation is revoked, then hedge accounting
is discontinued prospectively. Any adjustment up to that point to a hedged item, for which the effective interest method
is used, is amortised to statement of income as part of the recalculated effective interest rate of the item over its
remaining life.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a
particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect
statement of income, the effective portion of changes in the fair value of the derivative is recognized in other
comprehensive income in the hedging reserve. The amount recognised in other comprehensive income is reclassified
to statement of income as a reclassification adjustment in the same period as the hedged cash flows affect statement
of income, and in the same line item in the statement of comprehensive income. Any ineffective portion of changes in
the fair value of the derivative is recognised immediately in statement of income. If the hedging derivative expires or is
sold, terminated, or exercised, or the hedge no longer meets the criteria for cash flow hedge accounting, or the hedge
designation is revoked, then hedge accounting is discontinued prospectively. In a discontinued hedge of a forecast
transaction the cumulative amount recognised in other comprehensive income from the period when the hedge was
effective is reclassified from equity to statement of income as a reclassification adjustment when the forecast
transaction occurs and affects statement of income. If the forecast transaction is no longer expected to occur, then the
balance in other comprehensive income is reclassified immediately to statement of income as a reclassification
adjustment.
(ii) Derivatives held for trading purposes
The Group’s derivative trading instruments includes, forward foreign exchange contracts and interest rate swaps. The
Group sells these derivatives to customers in order to enable them to transfer, modify or reduce current and future
risks. These derivative instruments are fair valued as at the end of reporting date and the corresponding fair value
changes is taken to the consolidated statement of income.
(i) Property and equipment
(i) Recognition and measurement
Items of property and equipment are initially measured at cost and subsequently at cost less accumulated depreciation
and accumulated impairment losses, if any, except for land and building which are subsequently measured at fair value.
Capital work in progress is stated at cost, net of accumulated impairment losses, if any
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
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97
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Property and equipment (continued)
(i) Recognition and measurement (continued)
Revaluations of freehold land and buildings are carried out by an independent valuer. Net surpluses arising on
revaluation are credited to a revaluation reserve, except that a revaluation increase is recognised as income to the
extent that it reverses a revaluation decrease of the same asset previously recognised as an expense. A decrease as a
result of a revaluation is recognised as an expense, except that it is charged directly against any related revaluation
surplus to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that
same asset. On disposal the related revaluation surplus is credited to retained earnings.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a
working condition for their intended use, the costs of dismantling and removing the items and restoring the site on
which they are located and capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property or equipment have different useful lives, they are accounted for as separate items
(major components) of property and equipment.
The gain or loss on disposal of an item of property and equipment is determined by comparing the proceeds from
disposal with the carrying amount of the item of property and equipment, and is recognised in other income/other
expenses in profit or loss.
(ii) Subsequent costs
The cost of replacing a component of an item of property or equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can
be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing
of property and equipment are recognised in consolidated statement of income as incurred.
(iii) Depreciation
The depreciable amount is the cost of property and equipment, or other amount substituted for cost, less its residual
value.
Depreciation is recognised in consolidated statement of income on a straight-line basis over the estimated useful lives
of each part of an item of property and equipment since this most closely reflects the expected pattern of consumption
of the future economic benefits embodied in the asset and is based on cost of the asset less its estimated residual
value. Land and Capital work in progress are not depreciated.
The estimated useful lives for the current and comparative years are as follows:
Buildings
20 - 30 years
Leasehold improvements
6 - 10 years
Furniture and equipment
3 - 8 years
Motor vehicles
5 years
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Property and equipment (continued)
(iv) Right-of-use assets (Leases)
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases less
than 12 months and leases of low-value assets (USD 5,000 or less). The Group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to use the underlying assets.
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets, as follows:
Buildings
2 - 40 years
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date. Right-of-use assets are subject to impairment in line
with the policy for the impairment of non-financial assets.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the lease payments or a change in the assessment of an option to purchase the underlying asset.
(j) Impairment of goodwill and intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the
Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the
fair value of the non-controlling interest in the acquiree.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances
indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the
higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense
and is not subsequently reversed.
(ii) Intangible assets
The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment
losses.
Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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ANNUAL REPORT 2022
99
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Impairment of goodwill and intangible assets (continued)
(ii) Intangible assets (continued)
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated statement
of income as the expense category that is consistent with the function of the intangible assets.
The estimated useful economic life of intangible assets with finite lives are; Brand 18 to 19 years, Customer relationship
11 to 12 years, Core deposit 13 to 16 years and Internally developed software and others 5 years.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective
basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated statement of
income when the asset is derecognised.
(k) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
(l) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the liability.
(m) Financial guarantee contract and loan commitments
Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument and
the guarantees may become payable on demand. Financial guarantee liabilities are recognised initially at their fair value,
and this initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently
carried at the higher of this amortised amount and the present value of any expected payment when a payment under the
guarantee has become probable. Financial guarantees are included within other liabilities.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Employee benefits
Defined contribution plans
The Bank provides for its contribution to the State administered retirement fund for Qatari employees in accordance with
the retirement law, and the resulting charge is included in staff cost in the consolidated statement of income. The Bank has
no further payment obligations once the contributions have been paid. The contributions are recognised when they are
due.
Defined benefit plan
The Bank makes provision for end of service benefits payable to its expatriate employees on the basis of the employees’
length of service in accordance with the employment policy of the Bank and the applicable provisions of the Labour Law.
This provision is included in other provisions as part of other liabilities in the consolidated statement of financial position.
The expected costs of these benefits are accrued over the period of employment.
Alternatifbank, under Turkish Labour Law, is required to pay termination benefits to each employee who has completed at
least one year of service and whose employment is terminated without due cause, is called up for military service, dies or
who retires. There are certain transitional provisions relating to length of service prior to retirement. The amount payable
consists of one month’s salary subject to a maximum threshold per employee for each year of service. There are no
agreements for pension commitments other than the legal requirement as explained above. The liability is not funded, as
there is no funding requirement.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Share-based payments
Employees (including senior management) of the Bank receive remuneration in the form of share-based payments,
whereby employees are granted share appreciation rights, which are settled in cash (cash settled transactions).
Cash settled transactions
The cost of cash settled transactions is measured at fair value at the grant date using Black Scholes model, further details of
which are given in Note 20. The fair value is measured initially and at each reporting date up to and including the settlement
date, with changes in fair value recognised in employee benefits expense Note 31. The fair value is expensed over the period
until the vesting date with recognition of a corresponding liability.
(o) Share capital and reserves
(i) Share issue costs
Incremental costs directly attributable to the issue of an equity instrument are deducted from the initial measurement
of the equity instruments.
(ii) Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Bank’s equity
holders.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
101
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Interest income and expense
Interest income and expense are recognised in the consolidated statement of income using the effective interest rate
method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts
through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of
the financial asset or liability. When calculating the effective interest rate, the Group estimates future cash flows considering
all contractual terms of the financial instrument, but not future credit losses.
For the financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by
applying the effective interest rate to their amortised cost (i.e. net of the expected credit loss provision). If the asset is no
longer credit-impaired, then the calculation of interest income reverts to the gross basis. The calculation of the effective
interest rate includes all transaction costs and fees paid or received that are an integral part of the effective interest rate.
Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or
liability.
Interest income and expense include:
-
Interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest rate
basis;
-
The effective portion of fair value changes in qualifying hedging derivatives designated in cash flow hedges of variability
in interest cash flows, in the same period that the hedged cash flows affect interest income / expense;
-
The ineffective portion of fair value changes in qualifying hedging derivatives designated in cash flow hedges of interest
rate risk; and
-
Fair value changes in qualifying derivatives, including hedge ineffectiveness, and related hedged items in fair value
hedges of interest rate risk.
Interest income on investment (debt) securities measured at FVOCI and measured at amortised cost is calculated using
effective interest rate method and is also included in interest income.
(q) Fee and commission income and expense
Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability are
included in the measurement of the effective interest rate.
Other fees and commission income, including account servicing fees, investment management fees, sales commission,
placement fees and syndication fees, are recognised as the related services are performed. When a loan commitment is
not expected to result in the draw-down of a loan, the related loan commitment fees are recognised on a straight-line basis
over the commitment period. Other fees and commission expense relate mainly to transaction and service fees, which are
expensed as the services are received.
(r) Income from investment securities
Gains or losses on the disposal of investment securities are recognised in profit or loss as the difference between fair value
of the consideration received and carrying amount of the investment securities.
Unrealised gains or losses on fair value changes from remeasurement of investment securities classified as held for trading
or designated as fair value through profit or loss are recognised in consolidated statement of income.
Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not
recognised in the consolidated statement of income on derecognition of such securities.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
102
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(s) Dividend income
Dividend income is recognised when the right to receive dividend income is established.
(t) Income tax expenses
Taxes are calculated based on tax laws and regulations in the countries in which the Group operates. Tax is recognized based
on an evaluation of the expected tax charge/credit. Income tax and deferred tax mainly arising from Alternatif bank
operations. The parent company operations inside Qatar are not subject to income tax except certain subsidiaries
operations, which are subject to tax as per the General Tax Authority and Qatar Financial Centre Authority tax regulations.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is settled based on laws that have been enacted at
the reporting date.
(u) Earnings per share
The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary equity holders of the Bank, further adjusted for the dividend appropriation for
instruments eligible for additional Tier 1 Capital, if any, by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary equity holders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
(v) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker is the person or group that allocates resources to and assesses the
performance of the operating segments of an entity. The Group has determined the Chief Executive Officer of the Bank as
its chief operating decision maker.
All transactions between operating segments are conducted on an arm’s length basis directly associated with each segment
are included in determining operating segment performance.
(w) Fiduciary activities
The Group acts as fund manager and in other fiduciary capacities that result in the holding or placing of assets on behalf of
individuals, corporate and other institutions. These assets and income arising thereon are excluded from these consolidated
financial statements, as they are not assets of the Group.
(x) Repossessed collateral
Repossessed collateral against settlement of customer debts are stated within the consolidated statement of financial
position under “Other assets” at their acquisition value. According to QCB instructions, the Group should dispose of any land
and properties acquired in settlement of debts within a period not exceeding three years from the date of acquisition
although this period can be extended with the approval of QCB.
(y) Appropriations for Instruments Eligible for Additional Capital
Appropriations for Instruments Eligible for Additional Capital are treated as dividends.
(z) Comparatives
Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with
comparative information.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
103
4. FINANCIAL RISK MANAGEMENT
a) Introduction and overview
The Group’s business involves taking risks in a targeted manner and managing them professionally. The core functions of
the Group’s risk management are to identify all key risks for the Group, measure these risks, manage the risk positions and
determine capital allocations. The Group regularly reviews its risk management policies and systems to reflect changes in
markets, products and best market practice.
The Group’s aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on the
Group’s financial performance. The Group defines risk as the possibility of losses or profits foregone, which may be caused
by internal or external factors.
Financial instruments
Financial instruments comprise the Group’s financial assets and liabilities. Financial assets include cash and balances with
Central banks, due from banks, loans and advances, investment securities, derivative financial assets and certain other
assets and financial liabilities include customer deposits, borrowings under repurchase agreements and interbank takings,
debt issued and other borrowed funds, derivative financial liabilities and certain other liabilities. Financial instruments also
include rights and commitments included in off- balance sheet items.
Note 3(d) describes the accounting policies followed by the Group in respect of recognition and measurement of the key
financial instruments and their related income and expense.
Risk management
The Group derives its revenue from assuming and managing customer risk for profit. Through a robust governance
structure, risk and return are evaluated to produce sustainable revenue, to reduce earnings volatility and increase
shareholder value. The most important types of risk are credit risk, liquidity risk, market risk and operational risk. Credit risk
reflects the possible inability of a customer to meet his/her repayment or delivery obligations. Market risk, which includes
foreign currency, interest rate risks and other price risks, is the risk of fluctuation in asset and commodity values caused by
changes in market prices and yields. Liquidity risk results in the inability to accommodate liability maturities and withdrawals,
fund asset growth or otherwise meet contractual obligations at reasonable market rates. Operational risk is the potential for
loss resulting from events involving people, processes, technology, legal issues, external events or execution or regulatory
issues.
Risk and other committees
The governance structure of the Group is headed by the Board of Directors. The Board of Directors evaluates risk by
engaging with the Group Chief Executive Officer and Chief Risk Officer along with the following Board and Management
Committees:
1) Board Risk and compliance Committee (BRCC), is responsible for all aspects of Risk Management across the Group
including but not restricted to credit risk, market risk, operational risk and cyber security risk. The BRCC reviews policies
on all risk matters, maintain oversight of all Bank risks through the Management Risk Committee (MRC), the GCEO, and
the CRO and provides risk management directives through the GCEO and the CRO. Further, the BRCC is responsible for
setting forth compliance and Anti-Money Laundering, and Combating Financing of Terrorism (AML/CFT) requirements,
criteria and control mechanisms for all activities involving Bank-wide related risks.
2) The Board Audit Committee is responsible for assisting the Board in fulfilling its responsibilities relating to oversee the
quality and integrity of the accounting, auditing, internal control and financial reporting practices of the Bank.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
104
4. FINANCIAL RISK MANAGEMENT (continued)
a) Introduction and overview (continued)
Risk and other committees (continued)
3) The Board Executive Committee (BEC) acts as a consultative body to the Board, which handles matters that require the
Board’s review, but may arise between Board meetings. The BEC is responsible for reviewing credit facilities and major
investments (within authorized limits as per QCB and Board guidelines) which are not discussed at length in Board
meetings. The BEC is also mandated with attending to issues relating treasury Board Committees Charter and to
approving all strategies, plans, budget/objectives and policies, procedures and systems as well as reviewing the
performance of the Bank in relation to each of the foregoing.
4) Board Remuneration, Nomination & Governance Committee The Board Remuneration, Nomination & Governance
Committee (BRNGC) is responsible for setting the Bank’s remuneration framework for the Board members,
management and staff. The BRNGC is responsible for recommending Board members’ appointments and re-
nomination for election by the General Assembly as well as conducting the annual self-assessment of the Board’s
performance.
5) Management Credit Committee (MCC) is the third highest-level authority on all Counterparty Credit Risk Exposures,
after the Board of Directors and Board Executive Committee. The MCC also is responsible for watch list and non-
performing assets to minimize risks, prevent losses, maximize recoveries and restore profits through rehabilitation,
restructuring, workout, collection or legal actions. MCC exercises its credit authority as conferred upon them by the
Delegation of Authority (“DoA”) as approved by the Board.
6) Management Risk Committee is the highest management authority on all risk related issues in the Group and its
subsidiaries and affiliates in which it has strategic investments. This committee provides recommendations on all risk
policy and portfolio issues to the Board Risk Committee.
7) Asset and Liability Committee (ALCO) is a management committee which is a decision making body relating to Asset
and Liability management. (i.e. balance sheet structure, funding, pricing, hedging, setting limits etc.) Under the overall
risk management framework, ALCO is a key component of risk management within the Bank.
8) Investment Committee (ICO) is the decision making committee for Bank’s proprietary investment activities, with a view
to optimize returns, ensuring that the investment book provides a liquidity buffer for the bank and mitigate market risk
attached to the nature of targeted investment.
9) Crisis Management Committee (CMC) is the authority for management of a crisis, entailing business continuity,
prevention, planning, testing, and evaluation. The CMC’s objective is to mitigate and minimize the consequences of
crisis events.
10) Information Security Committee (ISC) oversees the management of cyber risks in alignment with risk appetite,
regulatory and governmental mandates.
11) Technology Risk Committee (TRC) will oversee and facilitate the implementation of a Technology Risk Management
Framework in Commercial Bank. The impact of technology risk issues generally are felt across more than one unit in the
Bank and hence a cross functional team is required to address these issues effectively.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
105
4. FINANCIAL RISK MANAGEMENT (continued)
a) Introduction and overview (continued)
Risk and other committees (continued)
12) Sustainability Committee responsible for the Bank’s Environment, Social and Governance (ESG) strategy, performance
and reporting. This committee will oversee the Bank’s initiatives for implementation and evaluate the related risk and
opportunities.
b) Credit risk
Credit risk is defined as the potential that a borrower or counterparty will fail to meet its obligations in accordance with
agreed terms. The goal of credit risk management is to maximize the Group’s risk-adjusted rate of return by maintaining
credit risk exposure within acceptable parameters. Loans and advances are the largest sources of credit risk for the Group.
Other sources of credit risk exist throughout the activities of the Group, including investments in the banking book and in the
trading book. The Group also faces credit risk (or counterparty risk) in various financial instruments other than loans,
including: acceptances, interbank transactions, trade financing, foreign exchange transactions, derivative instruments, and
in the extension of commitments and guarantees, as well as the settlement of transactions. The Group maintains well
defined, written policies and procedures for identifying, measuring, monitoring, and controlling credit risk, governing
credit-granting activities in conformance with the risk appetite and limits defined by the Board. All extensions of credit are
made on an arm’s length basis in accordance with the Group’s credit-granting approval process by a combination of
authorized individuals, groups or credit committees, depending on the size and nature of the credit, who have the
experience, knowledge and background to exercise prudent judgement in assessing, approving and managing credit risks.
(i) Credit risk measurement
1. Loans and advances
The Group’s aim is to maintain a sound asset portfolio by optimizing its loan mix. This is being achieved through a
strategy of reducing exposure to non-core client relationships while selectively targeting economic sectors that
are core to the overall business strategy. In addition, the Group intends to diversify risk by increasing the size of the
consumer portfolio comprising of consumer loans, vehicle loans, credit cards and residential mortgages. In
measuring credit risk of loan and advances to customers and to banks, the Group reflects three components (i)
the ‘probability of default’ by the client or counterparty on its contractual obligations; (ii) current exposures to the
counterparty and its likely potential future exposure, from which the Group derive the ‘exposure at default’; and (iii)
the likely recovery ratio on the defaulted obligations (the ‘loss given default’).
(i) The Group assesses the probability of default of individual counterparties using internal rating tools tailored
to the various categories of counterparty. They combine statistical analysis along with the business
relationship officers and credit risk officers assessment and are independently validated. Clients of the Group
are segmented based on a 10-point rating scale (22 notches including modifiers) for the corporate book and
product based application scores for the retail book. The Group’s rating scale reflects the range of default
probabilities defined for each rating class. This means that, in principle, the probability of default changes with
the migration of ratings. The rating tools are kept under review and upgraded as necessary.
The ratings of the major rating agency are mapped to Group’s rating grades based on the long-term average
default rates for each external grade. The Group uses the external ratings where available to benchmark
internal credit risk assessment. Observed defaults per rating category vary year on year, especially over an
economic cycle.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
106
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(i) Credit risk measurement (continued)
1. Loans and advances (continued)
(ii) Exposure at default is based on the amounts the Group expects to be owed at the time of default. For
example, for a loan this is the carrying value. For a commitment, the Group includes any amount already
drawn plus the further amount that may have been drawn by the time of default, should it occur. For undrawn
facilities, the Group applies credit conversion factors that are prescribed by Qatar Central Bank and are
aligned to Bank of International Settlements (BIS) guidelines.
(iii) Loss given default or loss severity represents the Group’s expectation of the extent of loss on a claim should
default occur. It is expressed as percentage loss per unit of exposure and typically varies by type of
counterparty, type and seniority of claim and availability of collateral or other credit mitigation.
2. Debt securities and other bills
For debt securities and other bills, external ratings are used by Treasury for managing the credit risk exposures.
The investments in those securities and bills are viewed as a way to improve the overall asset quality, enhance yield
and provide a readily available source to meet the funding requirement.
(ii) Risk limit control and mitigation policies
Portfolio diversification
Portfolio diversification is an overriding principle, therefore, the credit policies are structured to ensure that the Group
is not over exposed to a given client, industry sector or geographic area. To avoid excessive losses if any single counter-
party is unable to fulfil its payment obligations, large exposure limits have been established per credit policy following
the local regulations. Limits are also in place to manage exposures to a particular country or sector. These risks are
monitored on an ongoing basis and subject to an annual or more frequent review, when considered necessary.
Collateral
In order to proactively respond to credit deterioration, the Group employs a range of policies and practices to mitigate
credit risk.
The most traditional of these is the taking of security for funds advanced, which is common practice. The Group
implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal
collateral types for loans and advances are:
•
Mortgages over residential properties;
•
Lending against lien marked deposits;
•
Charges over business assets such as premises, inventory and accounts receivable;
•
Charges over financial instruments such as debt securities and equities.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
107
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(ii) Risk limit control and mitigation policies (continued)
Collateral (continued)
Longer-term finance and lending to corporate entities are generally secured; working capital credit facilities are
generally unsecured. In addition, in order to minimize the credit loss, the Group will seek additional collateral from the
counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the
instrument. Debt securities, treasury and other eligible bills are generally unsecured, with the exception of asset-
backed securities and similar instruments, which are secured by portfolios of financial instruments.
Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees
and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which
are written undertakings by the Group on behalf of a customer authorizing a third party to draw drafts on the Group up
to a stipulated amount under specific terms and conditions – are collateralized by the underlying shipments of goods
to which they relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially
exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the
total unused commitments, as most commitments to extend credit are contingent upon customers maintaining
specific credit standards. The Group monitors the term to maturity of credit commitments because longer-term
commitments generally have a greater degree of credit risk than shorter-term commitments.
Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as at the
reporting date. With gross-settled derivatives, the Group is also exposed to a settlement risk, being the risk that the
Group honors its obligation but the counterparty fails to deliver the counter-value.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
108
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(iii) Maximum exposure to credit risk before collateral held or other credit enhancements
2022
2021
Credit risk exposures relating to assets recorded on the consolidated
statement of financial position are as follows:
Balances with central banks
5,349,035
11,558,894
Due from banks
20,843,798
10,942,011
Loans and advances to customers
98,016,182
98,003,163
Investment securities - debt
28,162,166
26,243,426
Other assets
2,013,092
1,559,522
Total as at 31 December
154,384,273
148,307,016
Other credit risk exposures are as follows:
Guarantees
17,631,602
18,178,171
Letters of credit
3,034,342
3,044,915
Unutilized credit facilities
3,855,417
2,433,180
Total as at 31 December
24,521,361
23,656,266
178,905,634
171,963,282
The above table represents a worse-case scenario of credit risk exposure to the Group, without taking account of any
collateral held or other credit enhancements attached.
(iv) Concentration of risks of financial assets with credit risk exposure
Geographical sectors
The following table breaks down the Group’s credit exposure at their carrying amounts (without taking into account any
collateral held or other credit support), as categorized by geographical region. For this table, the Group has allocated
exposures to regions based on the country of domicile of its counterparties.
2022
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Balances with central banks
4,053,298
-
1,295,737
-
5,349,035
Due from banks
3,100,793
1,393,879
2,570,565
13,778,561
20,843,798
Loans and advances to customers
83,654,363
1,452,555
9,911,880
2,997,384
98,016,182
Investment securities - debt
22,016,956
1,721,196
2,780,881
1,643,133
28,162,166
Other assets
1,842,036
-
171,056
-
2,013,092
114,667,446
4,567,630
16,730,119
18,419,078 154,384,273
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
109
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(iv) Concentration of risks of financial assets with credit risk exposure (continued)
Geographical sectors (continued)
2021
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Balances with central banks
9,699,541
-
1,859,353
-
11,558,894
Due from banks
1,109,795
157,668
3,864,511
5,810,037
10,942,011
Loans and advances to customers
80,729,496
1,162,509
10,832,955
5,278,203
98,003,163
Investment securities - debt
20,108,918
1,530,280
3,005,082
1,599,146
26,243,426
Other assets
1,197,357
-
362,165
-
1,559,522
112,845,107
2,850,457
19,924,066
12,687,386
148,307,016
2022
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Guarantees
9,687,293
725,093
1,211,760
6,007,456
17,631,602
Letters of credit
1,597,481
509,600
147,131
780,130
3,034,342
Unutilized credit facilities
3,448,308
100,123
158,420
148,566
3,855,417
14,733,082
1,334,816
1,517,311
6,936,152
24,521,361
2021
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Guarantees
8,523,198
597,432
869,217
8,188,324
18,178,171
Letters of credit
1,706,643
-
506,049
832,223
3,044,915
Unutilized credit facilities
1,980,687
100,132
198,960
153,401
2,433,180
12,210,528
697,564
1,574,226
9,173,948
23,656,266
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
110
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(iv) Concentration of risks of financial assets with credit risk exposure (continued)
Industry sectors
The following table breaks down the Group’s credit exposure at carrying amounts before taking into account collateral
held or other credit enhancements, as categorized by the industry sectors of the Group’s counterparties.
Gross exposure
2022
Gross exposure
2021
Funded
Government
36,844,301
44,309,991
Government agencies
7,396,217
6,605,118
Industry
8,629,212
8,185,946
Commercial
17,783,588
18,208,579
Services
52,688,115
43,153,829
Contracting
2,919,313
2,618,631
Real estate
19,137,077
18,206,163
Consumers
5,703,919
3,653,631
Other sectors
3,282,531
3,365,128
Total funded
154,384,273
148,307,016
Un-funded
Government institutions & semi government agencies
4,305,433
2,471,536
Services
7,688,954
8,968,904
Commercial and others
12,526,974
12,215,826
Total un-funded
24,521,361
23,656,266
Total
178,905,634
171,963,282
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
111
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality
The credit quality of financial assets is managed by the Group using internal and external credit risk ratings. The Group
follows an internal obligor risk rating (ORR) mechanism for grading relationships across its credit portfolio. The Group
utilises a ten-scale credit rating system with positive and negative modifiers, giving a total scale range of 22, of which 19
(with positive and negative modifiers) relate to performing and three to non-performing. Within performing, ORR 1 to
4- represents investment grade, ORR 5+ to 7+ represents sub-investment grade and 7 and 7- represent watch list. ORR
8 to 10 represents sub-standard, doubtful and loss respectively. All credits are assigned a rating in accordance with the
defined criteria. The Group endeavors continuously to improve upon the internal credit risk rating methodologies and
credit risk management policies and practices to reflect the true underlying credit risk of the portfolio and the credit
culture in the Group. All lending relationships are reviewed at least once in a year and more frequently in the case of
non-performing assets.
The following table sets out information about the credit quality of financial assets, commitments and financial
guarantees.
2022
Cash and Balances with Central Banks
(Excluding Cash on Hand) and Due from
Banks
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
19,611,014
-
-
19,611,014
Sub-investment grade - ORR 5 to 7
4,672,882
1,978,837
-
6,651,719
Substandard - ORR 8
-
-
-
-
Doubtful - ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
24,283,896
1,978,837
-
26,262,733
Loss allowance
(39,033)
(41,472)
-
(80,505)
24,244,863
1,937,365
-
26,182,228
Accrued Interest
10,605
Carrying amount
26,192,833
ORR = Obligatory Risk Rating
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
112
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2022
Loans and advances to Customers
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
39,999,326
183,864
-
40,183,190
Sub-investment grade - ORR 5 to 7
39,434,519
17,853,236
-
57,287,755
Substandard - ORR 8
-
-
213,462
213,462
Doubtful - ORR 9
-
-
1,037,635
1,037,635
Loss - ORR 10
-
-
3,794,505
3,794,505
Total - Gross
79,433,845
18,037,100
5,045,602
102,516,547
Loss allowance
(177,181)
(1,565,009)
(3,578,370)
(5,320,560)
79,256,664
16,472,091
1,467,232
97,195,987
Accrued Interest
820,195
Carrying amount
98,016,182
2022
Investment Securities - Debt
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
23,476,359
232,054
-
23,708,413
Sub-investment grade - ORR 5 to 7
4,004,588
105,794
-
4,110,382
Substandard - ORR 8
-
-
-
-
Doubtful ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
27,480,947
337,848
-
27,818,795
Loss allowance
(55,993)
(6,997)
-
(62,990)
27,424,954
330,851
-
27,755,805
Accrued interrest
406,361
Carrying amount
28,162,166
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
113
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2022
Loan Commitments and
financial Guarantees
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
11,565,111
139,534
-
11,704,645
Sub-investment grade - ORR 5 to 7
10,157,291
2,405,288
-
12,562,579
Substandard - ORR 8
-
-
29,497
29,497
Doubtful ORR 9
-
-
264
264
Loss - ORR 10
-
-
224,376
224,376
Total - Gross
21,722,402
2,544,822
254,137
24,521,361
Loss allowance
(71,105)
(26,415)
(220,833)
(318,353)
Carrying amount
21,651,297
2,518,407
33,304
24,203,008
2021
Cash and Balances with Central Banks
(Excluding Cash on Hand) and Due from Banks
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
15,193,469
7,584
-
15,201,053
Sub-investment grade - ORR 5 to 7
4,868,817
2,506,155
-
7,374,972
Substandard - ORR 8
-
-
-
-
Doubtful - ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
20,062,286
2,513,739
-
22,576,025
Loss allowance
(23,569)
(58,673)
-
(82,242)
20,038,717
2,455,066
-
22,493,783
Accrued Interest
7,122
Carrying amount
22,500,905
ORR = Obligatory Risk Rating
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
114
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2021
Loans and advances to Customers
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
46,168,623
1,336,613
-
47,505,236
Sub-investment grade - ORR 5 to 7
34,375,176
14,840,441
-
49,215,617
Substandard - ORR 8
-
-
633,746
633,746
Doubtful - ORR 9
-
-
1,915,244
1,915,244
Loss - ORR 10
-
-
2,236,536
2,236,536
Total - Gross
80,543,799
16,177,054
4,785,526
101,506,379
Loss allowance
(221,716)
(1,450,367)
(2,989,970)
(4,662,053)
80,322,083
14,726,687
1,795,556
96,844,326
Accrued Interest
1,158,837
Carrying amount
98,003,163
2021
Investment Securities - Debt
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
21,397,483
261,038
-
21,658,521
Sub-investment grade - ORR 5 to 7
4,228,153
111,720
-
4,339,873
Substandard - ORR 8
-
-
-
-
Doubtful ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
25,625,636
372,758
-
25,998,394
Loss allowance
(38,484)
(13,122)
-
(51,606)
25,587,152
359,636
-
25,946,788
Accrued interrest
296,638
Carrying amount
26,243,426
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
115
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2021
Loan Commitments and
financial Guarantees
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
5,636,266
99,553
-
5,735,819
Sub-investment grade - ORR 5 to 7
13,863,019
3,544,442
-
17,407,461
Substandard - ORR 8
-
-
1,670
1,670
Doubtful ORR 9
-
-
292,724
292,724
Loss - ORR 10
-
-
218,592
218,592
Total - Gross
19,499,285
3,643,995
512,986
23,656,266
Loss allowance
(86,785)
(54,375)
(26,433)
(167,593)
Carrying amount
19,412,500
3,589,620
486,553
23,488,673
Rescheduled loans and advances to customers
Rescheduled activities include extended payment arrangements, approved external management plans, modification
and deferral of payments. Restructuring policies and practices are based on indicators or criteria that, in the judgement
of local management, indicate that payment will most likely continue. These policies are kept under continuous review.
Following restructuring, a previously overdue customer account is reset to a normal status and managed together
with other similar accounts as non-impaired. The accounts which are restructured due to credit reasons in past 12
months will be classified under stage 2.
Collateral
The determination of eligible collateral and the value of collateral are based on QCB regulations and are assessed by
reference to market price or indices of similar assets.
The Group has collateral in the form of blocked deposits, pledge of shares or legal mortgage against loans
and advances to customers. Aggregate collateral for stage 1 as at 31 December 2022 is QAR 56,455 million (2021:
QAR 58,352 million), stage 2 QAR 17,978 million (2021: QAR 16,544 million) and stage 3 QAR 2,387 million (2021: QAR
2,281 million).
(vi) Repossessed collateral
During the year, the Group acquired ownership of land and building by taking possession of collateral held as security
for an amount of QAR 40 million (2021: QAR 529 million).
Repossessed properties proceeds are used to reduce the outstanding indebtedness and are sold as soon as
practicable. Repossessed property is classified in the consolidated statement of financial position within other assets.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
116
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(vii) Write-off policy
This determination is made after considering information such as the occurrence of significant changes in the
borrower’s/issuer’s financial position such that the borrower/issuer can no longer pay the obligation, or that proceeds
from collateral will not be sufficient to pay back the entire exposure. For smaller balance standardized loans, write-off
decisions generally are based on a product-specific past due status. The amount written off during the year was QAR
459 million (2021: QAR 838 million).
(viii) Inputs, assumptions and techniques used for estimating impairment
Significant increase in credit risk
When determining whether the risk of default on a financial instrument has increased significantly since initial
recognition, the Group considers reasonable and supportable information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative information and analysis including internal credit risk
grading system, external risk ratings, where available, delinquency status of accounts, credit judgement and, where
possible, relevant historical experience.The Group may also determine that an exposure has undergone a significant
increase in credit risk based on particular Qualitative indicators that it considers are indicative of such and whose effect
may not otherwise be fully reflected in its Quantitative analysis on a timely basis.
In determining whether credit risk has increased significantly since initial recognition following criteria are considered:
i)
Two ‘absolute’ notches downgrade for ratings better than Rating Grade 5 at the time of origination and one
‘absolute’ notch rating downgrade for other rated customers.
ii) Facilities restructured during previous twelve months.
iii) Facilities overdue by 30 days as at the reporting date in case of Retail Products and overdue by 60 days for
corporate customers.
Credit risk grades
Credit risk grades are defined using qualitative and quantitative factors that are indicative of risk of default. These
factors vary depending on the nature of the exposure and the type of borrower. Exposures are subject to on-going
monitoring, which may result in an exposure being moved to a different credit risk grade.
Generating the term structure of Probability of Default (PD)
The Group uses its own database of default history to model estimates of PD for respective ratings that are used in
credit decision making. Yearly transition matrices are developed to capture the rating migration of borrowers and
yearly PDs are calculated over 5 years to get the through-the-cycle (TTC) PD. In order the transform the TTC PD to
point in time, a credit index for the last five historical years is calculated based upon minimizing the sum of the squared
differences between the TTC PD and Point-in-time (PIT) PD matrix elements. This analysis includes the identification
and calibration of relationships between changes in default rates and changes in key macro-economic factors, across
various geographies in which the Group has exposures.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
117
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
Renegotiated financial assets
The contractual terms of a loan may be modified for a number of reasons, including changing market conditions,
customer retention and other factors not related to a current or potential credit deterioration of the customer. This
may involve extending the payment arrangements and documenting the agreement of new loan conditions.
Management continuously reviews renegotiated loans to ensure that all criteria are met and that future payments are
likely to occur.
The accounts which are restructured due to credit reasons in past 12 months will be classified under Stage 2.
Definition of default
The Group considers a financial asset to be in default when:
-
the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions
such as realising security (if any is held); or
-
the borrower is past due more than 90 days on any material credit obligation to the Group; or
-
the borrower is rated 9 (Doubtful) or 10 (Loss).
In assessing whether a borrower is in default, the Group also considers indicators that are:
-
quantitative – e.g. overdue status and non-payment on another obligation of the same issuer to the Group; and
-
based on data developed internally and obtained from external sources.
Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to
reflect changes in circumstances. The definition of default largely aligns with that applied for regulatory capital
purposes.
Measurement of ECL
The key inputs into the measurement of ECL are the term structure of the following variables:
-
probability of default (PD);
-
loss given default (LGD); and
-
exposure at default (EAD).
These parameters are generally derived from internally developed statistical models and other historical data. They
are adjusted to reflect forward-looking information as described above.
PD estimates are estimates at a certain date, which are calculated based on statistical rating models. These statistical
models are primarily based on internally compiled data comprising both quantitative and qualitative factors.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
118
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
Measurement of ECL (continued)
LGD is the magnitude of the likely loss if there is a default. The Group has applied LGD factors based on the type of
collateral available and has used the LGD floors that are prescribed by QCB for certain collateral types.
LGD estimation includes:
1) Cure Rate: Defined as the ratio of accounts which have fallen to default and have managed to move backward to
the performing accounts.
2) Recovery Rate: Defined as the ratio of liquidation value to market value of the underlying collateral at the time of
default would also account for expected recovery rate from a general claim on the individual’s assets for the
unsecured portion of the exposure.
Discounting Rate: Defined as the opportunity cost of the recovery value not being realized on the day of default
adjusted for time value.
EAD represents the expected exposure in the event of a default. The Group derives the EAD from the current exposure
to the counterparty and potential changes to the current amount allowed under the contract including amortization.
The EAD of a financial asset is its gross carrying amount.
For lending commitments and financial guarantees, the EAD includes the amount drawn, as well as potential future
amounts that may be drawn under the contract, which are estimated based on historical observations and forward-
looking forecasts.
Incorporation of forward-looking information
Incorporating forward-looking information increases the level of judgement as to how changes in these
macroeconomic factors will affect the Expected Credit Loss (ECL) applicable to the stage 1 and stage 2 exposures
which are considered as performing. The methodologies and assumptions involved, including any forecasts of future
economic conditions, are reviewed periodically.
The assessment of Significant Increase in Credit Risk (SICR) and the calculation of ECL both incorporate forward-
looking information. The Group has performed historical analysis and identified the key economic variables impacting
credit risk and expected credit losses for each portfolio.
The Group employs statistical models to incorporate macro-economic factors on historical default rates. In the case
that none of the macro-economic parameters are statistically significant or the results of forecasted PDs are too
deviated from the present forecast of the economic conditions, qualitative PD overlay is used by management based
on portfolio analysis.
These economic variables and their associated impact on the PD, EAD and LGD vary by financial instrument. Expert
judgement has also been applied in this process. Forecasts of these economic variables (the ‘base economic
scenario’) are based on available information and include mean reversion approaches for long-term forecasts. The
impact of these economic variables on the PD has been determined by performing statistical regression analysis.
.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
119
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
Incorporation of forward-looking information (continued)
In addition to the base economic scenario, other possible scenarios are assessed along with scenario weightings. The
number of other scenarios used is set based on the analysis of each major product type to ensure non linearities are
captured. At 31 December 2021, the Group concluded that three scenarios appropriately captured non linearities for
all portfolios. The scenario weightings are determined by a combination of statistical analysis and expert credit
judgement, taking account of the range of possible outcomes each chosen scenario is representative of. The
assessment of SICR is performed using the lifetime PD under each of the base, and other scenarios, multiplied by the
associated scenario weighting, along with qualitative and backstop indicators. This determines whether the whole
financial instrument is in Stage 1, Stage 2 or Stage 3 and hence whether 12-month or lifetime ECL should be recorded.
Following this assessment, the Group measures ECL as either a probability weighted 12 month ECL (Stage 1), or a
probability weighted lifetime ECL (Stages 2 and 3).
These probability-weighted ECLs are determined by running each scenario through the relevant ECL model and
multiplying it by the appropriate scenario weighting (as opposed to weighting the inputs). As with any economic
forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty and
therefore the actual outcomes may be significantly different to those projected. The Group considers these forecasts
to represent its best estimate of the possible outcomes.
Predicted relationships between the key indicators and default and loss rates on various portfolios of financial assets
have been developed based on analyzing historically data estimate of expected credit losses. In reality there will be
interdependencies between the various economic inputs and the exposure to sensitivity will vary across the economic
scenarios.
For the year end 31 December 2021, the Group has updated inputs and assumptions used for the determination of
expected credit losses (“ECLs”) in response to uncertainties caused by COVID 19. ECLs were estimated based on a
range of forecast economic conditions as at that date. The Group has considered the impact of higher volatility in the
forward-looking macro-economic factors, when determining the severity and likelihood of economic scenarios for
ECL determination and will continue to review the same for the upcoming reporting periods.
The ECL models have been updated through adjustments in the methods of scenario construction and the underlying
weightages assigned to these scenarios. The forward-looking factor (here Credit Index or CI) used is determined from
the observed historical default rates of the specific portfolios. The credit index is used to forecast expected point-in-
time probabilities of default for the credit portfolio of the Bank.
For the purpose of estimation of ECL, following assumptions were used:
2022
2021
Average oil prices
$81/bbl
$73/bbl
GDP growth
3.3%
3.6%
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
120
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
The Bank also continues to review its Loss Given Default assumptions and has made adjustments to the same. The
aforementioned values of macro-economic factors have been further overlaid by applying conservative scenario
weightings as follows:
2022
2021
Upside Case
15%
0%
Base Case
70%
65%
Downside Case
15%
35%
As the COVID-19 situation continues to evolve, these estimates may be reassessed and adjusted in future.
Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of
any regulatory, legislative or political changes, have also been considered, but are not deemed to have a material
impact and therefore no adjustment has been made to the ECL for such factors. This is reviewed and monitored for
appropriateness on a quarterly basis.
The table below shows the loss allowance on loans and advances to customers assuming each forward-looking
scenario (e.g. base, upside and downside) were weighted 100% instead of applying scenario probability weights
across the three scenarios.
2022
2021
100% Base Case, loss allowance would be higher/ (lower) by
(35,144)
(66,510)
100% Upside Case, loss allowance would be higher/ (lower) by
(201,373)
(134,101)
100% Downside Case, loss allowance would be higher/ (lower) by
365,377
123,790
These estimates are based on comparisons performed at 31 December.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
121
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
2022
Movement in ECL
Stage 1
Stage 2
Stage 3
Total
Opening Balance as at 1 January 2022
Due from banks and balances with central banks
23,569
58,673
-
82,242
Loans and advances to customers
221,716
1,450,367
2,989,970
4,662,053
Investment Securities (Debt)
38,484
13,122
-
51,606
Loan Commitments and Financial Guarantees
86,785
54,375
26,433
167,593
370,554
1,576,537
3,016,403
4,963,494
ECL Charge for the Period (net)
Due from banks and balances with central banks
15,619
(17,201)
-
(1,582)
Loans and advances to customers
(48,124)
126,461
1,130,416
1,208,753
Investment Securities (Debt)
17,547
(6,125)
-
11,422
Loan Commitments and Financial Guarantees
(15,207)
(31,637)
197,081
150,237
(30,165)
71,498
1,327,497
1,368,830
Write offs / Transfer
Due from banks and balances with central banks
-
-
-
-
Loans and advances to customers
-
-
(458,600)
(458,600)
Investment Securities (Debt)
-
-
-
-
Loan Commitments and Financial Guarantees
-
-
-
-
-
-
(458,600)
(458,600)
Exchange differences
Due from banks and balances with central banks
(155)
-
-
(155)
Loans and advances to customers
3,589
(11,819)
(83,416)
(91,646)
Investment Securities (Debt)
(38)
-
-
(38)
Loan Commitments and Financial Guarantees
(473)
3,677
(2,681)
523
2,923
(8,142)
(86,097)
(91,316)
Closing Balance as at 31 December 2022
Due from banks and balances with central banks
39,033
41,472
-
80,505
Loans and Advances to Customers*
177,181
1,565,009
3,578,370
5,320,560
Investment Securities (Debt)
55,993
6,997
-
62,990
Loan Commitments and Financial Guarantees
71,105
26,415
220,833
318,353
343,312
1,639,893
3,799,203
5,782,408
*Allowance for impairment of loans and advances to customers includes QAR 638 million of interest in suspense
(2021: QAR 611 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
122
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
2021
Movement in ECL
Stage 1
Stage 2
Stage 3
Total
Opening Balance as at 1 January 2021
Due from banks and balances with central banks
23,961
63,524
-
87,485
Loans and advances to customers
281,049
1,239,905
2,875,668
4,396,622
Investment Securities (Debt)
35,166
14,112
-
49,278
Loan Commitments and Financial Guarantees
89,665
47,673
23,545
160,883
429,841
1,365,214
2,899,213
4,694,268
ECL Charge for the Period (net)
Due from banks and balances with central banks
(176)
(4,851)
-
(5,027)
Loans and advances to customers
(66,442)
271,907
1,073,347
1,278,812
Investment Securities (Debt)
3,367
(990)
-
2,377
Loan Commitments and Financial Guarantees
1,881
(24,388)
5,049
(17,458)
(61,370)
241,678
1,078,396
1,258,704
Write offs / Transfer
Due from banks and balances with central banks
-
-
-
-
Loans and advances to customers
-
-
(837,654)
(837,654)
Investment Securities (Debt)
-
-
-
-
Loan Commitments and Financial Guarantees
-
-
-
-
-
-
(837,654)
(837,654)
Exchange differences
Due from banks and balances with central banks
(216)
-
-
(216)
Loans and advances to customers
7,109
(61,445)
(121,391)
(175,727)
Investment Securities (Debt)
(49)
-
-
(49)
Loan Commitments and Financial Guarantees
(4,761)
31,090
(2,161)
24,168
2,083
(30,355)
(123,552)
(151,824)
Closing Balance as at 31 December 2021
Due from banks and balances with central banks
23,569
58,673
-
82,242
Loans and Advances to Customers
221,716
1,450,367
2,989,970
4,662,053
Investment Securities (Debt)
38,484
13,122
-
51,606
Loan Commitments and Financial Guarantees
86,785
54,375
26,433
167,593
370,554
1,576,537
3,016,403
4,963,494
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
123
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its obligations when they fall due as a result of e.g. customer deposits
being withdrawn, cash requirements from contractual commitments, or other cash outflows, such as debt maturities or
margin calls for derivatives etc. Such outflows would deplete available cash resources for client lending, trading activities
and investments. In extreme circumstances, lack of liquidity could result in reductions in the consolidated statement of
financial position and sales of assets, or potentially an inability to fulfil lending commitments. The risk that the Group will be
unable to do so is inherent in all banking operations and can be affected by a range of institution-specific and market-wide
events including, but not limited to, credit events, merger and acquisition activity, systemic shocks and natural disasters.
(i) Management of liquidity risk
The management of liquidity risk is governed by the Group’s liquidity policy. The primary objective of liquidity risk
management; over which ALCO has oversight, is to provide a planning mechanism for unanticipated changes in the
demand or needs for liquidity created by customer behavior or abnormal market conditions. ALCO emphasizes the
maximization and preservation of customer deposits and other funding sources. ALCO also monitors deposit rates,
levels, trends and significant changes. Deposit marketing plans are regularly reviewed for consistency with the liquidity
policy requirements. ALCO has in place a contingency plan, which is periodically reviewed. The Group’s ability to raise
wholesale and/or long term funding at competitive costs is directly impacted by the Bank’s credit ratings, which are as
follows:
Moody’s:
Long Term A2, Short Term P1, financial strength Ba1 and outlook Stable.
Fitch:
Long Term A-, Short Term F2, financial strength BB+ and outlook Stable.
Standard & Poor’s: Long Term A-, Short Term A-2, financial strength BBB- and outlook stable
(ii) Exposure to liquidity risk
The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from
customers. For this purpose, net liquid assets are considered as including cash and cash equivalents and investment
grade debt securities for which there is an active and liquid market less any deposits from banks, debt securities, other
borrowings and commitments maturing within the next month. A similar, but not identical, calculation is used to
measure the Group’s compliance with the liquidity limit established by the Group’s lead regulator, QCB under the
heading ‘Liquidity coverage ratio’ (LCR). The average liquidity coverage ratio maintained by the Group as at 31
December 2022 is 172.78% (2021: 420.95%), as against the minimum requirement of 100% for the year ended 31
December 2022 (100% for 31 December 2021) as per QCB regulations.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
124
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iii) Maturity analysis
The following table sets out the maturity profile of the Group’s assets and liabilities. The contractual maturities of assets
and liabilities have been determined on the basis of the remaining period at 31 December to the contractual maturity
date and do not take account of the effective maturities as indicated by the Group’s deposit retention history and the
availability of liquid funds. Management monitors the maturity profile to ensure that adequate liquidity is maintained.
Carrying
amount
Demand /
within
1 month
1-3 months
3 months –
1 year
Subtotal
1 year
1-5 years
More than
5 years No Maturity
2022
Cash and balances
with central banks
8,030,334
1,427,954
-
-
1,427,954
-
-
6,602,380
Due from banks
20,843,798
14,583,077
661,791
5,343,727
20,588,595
255,203
-
-
Loans and advances
to customers
98,016,182
9,407,718
3,469,045
11,662,470
24,539,233
18,602,986
54,873,963
-
Investment
securities
29,835,260
72,355
490,347
2,665,357
3,228,059
15,527,989
9,406,118
1,673,094
Investment in
associates and a
joint arrangement
3,101,753
-
-
-
-
-
-
3,101,753
Property and
equipment and all
other assets
9,293,256
2,059,795
275,983
-
2,335,778
3,358,678
-
3,598,800
Total
169,120,583
27,550,899
4,897,166
19,671,554
52,119,619
37,744,856 64,280,081
14,976,027
Due to banks
24,054,014
7,863,034
5,676,664
5,487,092
19,026,790
5,021,262
-
5,962
Customer deposits
83,167,492
52,551,025
16,188,899
11,899,117
80,639,041
2,526,487
-
1,964
Debt securities
10,714,316
45,212
56,382
3,271,452
3,373,046
6,184,098
1,157,027
145
Other borrowings
15,941,527
244,246
1,890,156
3,706,679
5,841,081
10,072,100
-
28,346
Other liabilities
9,723,904
4,598,021
1,775,391
2,542,515
8,915,927
737,100
-
70,877
Total
143,601,253
65,301,538
25,587,492 26,906,855
117,795,885
24,541,047
1,157,027
107,294
Difference
25,519,330 (37,750,639) (20,690,326)
(7,235,301) (65,676,266) 13,203,809
63,123,054
14,868,733
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
125
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iii) Maturity analysis (continued)
Carrying
amount
Demand /
within
1 month 1-3 months
3 months –
1 year
Subtotal
1 year
1-5 years
More than
5 years No Maturity
2021
Cash and balances
with central banks
17,915,385
8,215,244
-
-
8,215,244
-
-
9,700,141
Due from banks
10,942,011
6,214,797
681,562
3,812,948
10,709,307
232,704
-
-
Loans and advances
to customers
98,003,163
11,412,286
2,328,064
12,012,606
25,752,956
20,662,226
51,587,981
-
Investment securities
26,722,691
22,757
104,094
2,099,212
2,226,063
14,938,689
8,788,160
769,779
Investment in
associates and a joint
arrangement
2,961,240
-
-
-
-
-
-
2,961,240
Property and
equipment and all
other assets
8,919,691
1,292,567
775,167
36,888
2,104,622
3,363,269
-
3,451,800
Total
165,464,181
27,157,651
3,888,887
17,961,654
49,008,192
39,196,888
60,376,141
16,882,960
Due to banks
17,776,904
5,940,042
2,935,537
2,602,941
11,478,520
6,297,361
-
1,023
Customer deposits
81,958,484
43,941,107
14,975,254
17,626,309
76,542,670
5,414,230
-
1,584
Debt securities
15,285,788
85,734
1,863,298
2,625,212
4,574,244
9,551,240
1,159,222
1,082
Other borrowings
15,718,753
398,971
1,432,474
5,420,025
7,251,470
8,458,371
-
8,912
Other liabilities
10,651,030
4,295,086
1,426,448
4,153,640
9,875,174
713,217
-
62,639
Total
141,390,959 54,660,940
22,633,011
32,428,127
109,722,078
30,434,419
1,159,222
75,240
Difference
24,073,222 (27,503,289)
(18,744,124) (14,466,473)
(60,713,886)
8,762,469
59,216,919
16,807,720
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
126
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iv) Maturity analysis (financial liabilities and derivatives)
The table below summarizes the maturity profile of the Group’s financial liabilities at 31 December based on contractual
undiscounted repayment obligations.
2022
Carrying
amount
Gross
undiscounted
cash flows
Less than
1 month
1-3 months
3 months –
1 year
1-5 years
More than
5 years
Non-derivative
financial liabilities
Due to banks
24,054,014
24,941,113
7,948,343 6,253,568 5,529,430
5,209,772
-
Customer deposits
83,167,492 84,283,971 49,382,458
15,056,116 11,658,437 8,186,960
-
Debt securities
10,714,316
11,220,382
91,725
58,938
3,617,034
6,515,696
936,989
Other borrowings
15,941,527
16,956,107
226,221
1,773,403 3,776,064
11,180,419
-
Total liabilities
133,877,349
137,401,573 57,648,747
23,142,025 24,580,965 31,092,847
936,989
2021
Carrying
amount
Gross
undiscounted
cash flows
Less than
1 month
1-3 months
3 months –
1 year
1-5 years
More than
5 years
Non-derivative
financial liabilities
Due to banks
17,776,904
18,627,358
6,051,140
2,934,825
3,286,996
6,298,349
56,048
Customer deposits
81,958,484
85,046,410
45,498,158
16,070,552
17,961,794
5,515,906
-
Debt securities
15,285,788
17,249,408
5,935
1,902,423
3,831,131
10,397,152
1,112,767
Other borrowings
15,718,753
17,746,486
274,329
1,842,036
6,441,810
9,188,311
-
Total liabilities
130,739,929 138,669,662
51,829,562
22,749,836
31,521,731
31,399,718
1,168,815
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
127
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iv) Maturity analysis (financial liabilities and derivatives) (continued)
Derivative financial instruments:
Generally, forward foreign exchange contracts are settled on a gross basis and interest rate swaps are settled on a net
basis.
2022
Total
1-3 months
3 months –
1 year
1-5 years
More than 5
years
Derivatives Held for Trading:
Forward foreign exchange contracts:
Outflow
(22,280,252) (8,098,044)
(8,638,362)
(4,531,608)
(1,012,238)
Inflow
20,846,162
8,016,198
7,420,521
4,249,184
1,160,259
Interest rate swaps:
Outflow
(699,914)
(80,145)
(487,955)
(114,814)
(17,000)
Inflow
706,500
80,517
489,109
119,200
17,674
Derivatives Held as Fair Value
Hedges:
Interest rate swaps:
Outflow
(269,564)
(3,902)
(22,800)
(90,821)
(152,041)
Inflow
298,827
6,675
25,475
105,273
161,404
Derivatives Held as Cash Flow
Hedges:
Forward foreign exchange contracts:
Outflow
(4,225,255)
-
(94,296)
(3,941,058)
(189,901)
Inflow
4,008,770
-
49,819
3,773,669
185,282
Interest rate swaps:
Outflow
(1,140,362)
(116,737)
(694,836)
(328,789)
-
Inflow
1,156,218
116,737
701,664
337,817
-
Total Outflows
(28,615,347) (8,298,828) (9,938,249) (9,007,090)
(1,371,180)
Total inflows
27,016,477
8,220,127
8,686,588
8,585,143
1,524,619
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
128
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iv) Maturity analysis (financial liabilities and derivatives) (continued)
2021
Total
1-3 months
3 months –
1 year
1-5 years
More than 5
years
Derivatives Held for Trading:
Forward foreign exchange contracts
Outflow
(28,135,952)
(2,545,089)
(11,683,342)
(13,301,230)
(606,291)
Inflow
26,550,681
2,569,700
10,380,801
12,988,104
612,076
Interest rate swaps:
Outflow
(97,435)
(3,365)
(50,594)
(35,928)
(7,548)
Inflow
108,674
5,054
54,710
40,319
8,591
Derivatives Held as Fair Value
Hedges:
Interest rate swaps:
Outflow
(292,365)
(3,902)
(18,899)
(97,796)
(171,768)
Inflow
19,592
369
1,261
6,864
11,098
Derivatives Held as Cash Flow
Hedges:
Forward foreign exchange contracts:
Outflow
(4,312,808)
-
(468,787)
(3,650,056)
(193,965)
Inflow
4,178,972
-
77,923
3,914,032
187,017
Interest rate swaps:
Outflow
(2,300,280)
(364,051)
(1,046,939)
(766,004)
(123,286)
Inflow
2,297,201
364,051
1,045,190
764,674
123,286
Total Outflows
(35,138,840)
(2,916,407)
(13,268,561)
(17,851,014)
(1,102,858)
Total inflows
33,155,120
2,939,174
11,559,885
17,713,993
942,068
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
129
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(v) Off-balance sheet items
The table below summarizes contractual expiry dates of the Group’s off - financial position financial instruments:
2022
Below 1 Year
Above 1 Year
Total
Loan commitments
3,284,861
570,556
3,855,417
Guarantees and other financial facilities
11,261,587
9,404,357
20,665,944
Capital commitments
211,837
-
211,837
Total liabilities
14,758,285
9,974,913
24,733,198
2021
Below 1 Year
Above 1 Year
Total
Loan commitments
1,326,616
1,106,564
2,433,180
Guarantees and other financial facilities
10,401,575
10,821,511
21,223,086
Capital commitments
315,200
-
315,200
Total liabilities
12,043,391
11,928,075
23,971,466
(d) Market risk
The Group takes exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. Market risks arise from open positions in interest rate, currency and equity
products, all of which are exposed to general and specific market movements and changes in the level of volatility of market
rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices. The Group separates
exposures to market risk into either trading or non-trading portfolios and by product type.
The market risks arising from trading and non-trading activities are concentrated in Group Treasury and monitored by two
teams separately. Regular reports are submitted to the Board of Directors and heads of each business unit.
Trading portfolios include those positions arising from market-making transactions where the Group acts as principal with
clients or with the market.
Non-trading portfolios primarily arise from the interest rate management of the entity’s retail and commercial banking
assets and liabilities. Non-trading portfolios also consist of foreign exchange and sovereign bond investments.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
130
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(i) Management of market risks
Overall authority for market risk is vested in ALCO. Group Market Risk is responsible for the development of detailed
risk management policies (subject to review and approval by ALCO) and for the day-to-day review of their
implementation.
The Group’s proprietary investments are managed according to the Group’s internal investment policy, which has been
approved by the Board of Directors and drafted in accordance with the Qatar Central Bank guidelines. The Group’s
trading activities are conducted by Treasury and Investments Division. These activities are subject to business line
guidelines and policies. The Group employs several techniques to measure and control activities including sensitivity
analysis, position limits and risk based limits.
Investment proposals are approved at the Investment Committee and decisions driven by the investment strategy,
which is developed by the business line under ALCO oversight and approved by the Board.
(ii) Exposure to interest rate risk – non – trading portfolio
The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows
or fair values of financial instruments because of a change in market interest rates. Interest rate risk is managed
principally through monitoring interest rate gaps and by having pre-approved limits for repricing bands. ALCO is the
monitoring body for compliance with these limits and is assisted by Group Treasury in its day-to-day monitoring
activities.
The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair
value and cash flow risks. Interest margins may increase as a result of such changes but may reduce losses in the event
that unexpected movements arise. The Board sets limits on the level of mismatch of interest rate repricing that may be
undertaken, which is monitored daily by Group Treasury.
The Asset and Liability Management (“ALM”) process, managed through ALCO, is used to manage interest rate risk
associated with non-trading financial instruments. Interest rate risk represents the most significant market risk
exposure to the Group’s non-trading financial instruments.
The Group’s goal is to manage interest rate sensitivity so that movements in interest rates do not adversely affect net
interest income. Interest rate risk is measured as the potential volatility to the net interest rate income caused by
changes in market interest rates. The Group typically manages the interest rate risk of its non-trading financial
instruments by segmenting these assets and liabilities into two broad portfolios: non–discretionary and discretionary.
The non-discretionary portfolio consists of the Group’s customer driven loans and deposit positions and securities
required to support regulatory requirements. To manage the resulting interest rate sensitivity of the Group’s non-
discretionary portfolio, the Group uses a discretionary portfolio of securities, long dated deposits, inter-bank takings
and placements, and when warranted, derivatives. Strategically positioning the discretionary portfolio, the Group
largely manages the interest rate sensitivity in the non-discretionary portfolio.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
131
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk – non – trading portfolio (continued)
The following table summarizes the interest sensitivity position at year end, by reference to the re-pricing period or
maturity of the Group’s assets and liabilities.
A summary of the Group’s interest rate gap position on non-trading balances are as follows:
Repricing in:
Effective
interest
rate %
2022
Carrying
amount
Less than 3
months 3-12 months
1-5 years
More than
5 years
Non-
interest
sensitive
Cash and balances
with central banks
8,030,334
1,374,451
-
-
-
6,655,883
Due from banks
20,843,798
16,059,737
4,778,536
-
-
5,525
2.45%
Loans and
advances to
customers
98,016,182
42,628,397
48,291,932
2,685,535
105,193
4,305,125
5.82%
Investment
securities
29,835,260
1,314,674
3,876,077
13,842,076
9,129,339
1,673,094
4.91%
Investment in
associates and a
joint arrangement
3,101,753
-
-
-
-
3,101,753
Property and
equipment and all
other assets
9,293,256
268,685
93,186
62,480
6,278
8,862,627
169,120,583
61,645,944
57,039,731
16,590,091
9,240,810 24,604,007
-
Due to banks
(24,054,014)
(14,084,836)
(9,962,362)
(854)
-
(5,962)
2.00%
Customer deposits
(83,167,492)
(50,653,106)
(11,899,116)
(2,526,487)
- (18,088,783)
2.84%
Debt securities
(10,714,316)
(111,456)
(3,530,638)
(6,184,098)
(884,027)
(4,097)
2.64%
Other borrowings
(15,941,527)
(1,979,053)
(3,911,158)
(9,973,905)
(77,411)
-
3.42%
Other liabilities
(9,723,904)
(123,789)
(56,192)
(43,071)
(805)
(9,500,047)
Equity
(25,519,330)
-
-
-
-
(25,519,330)
(169,120,583) (66,952,240) (29,359,466) (18,728,415)
(962,243) (53,118,219)
-
Interest rate
sensitivity gap
-
(5,306,296)
27,680,265
(2,138,324)
8,278,567 (28,514,212)
-
Cumulative
Interest rate
sensitivity gap
-
(5,306,296)
22,373,969 20,235,645
28,514,212
-
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
132
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk – non – trading portfolio (continued)
A summary of the Group’s interest rate gap position on non-trading balances are as follows:
Repricing in:
Effective
interest
rate %
2021
Carrying
amount
Less than 3
months
3-12 months
1-5 years
More than
5 years
Non-
interest
sensitive
Cash and balances
with central banks
17,915,385
8,055,430
-
-
-
9,859,955
Due from banks
10,942,011
6,861,411
4,073,720
-
-
6,880
1.69%
Loans and
advances to
customers
98,003,163
35,337,584
53,010,446
3,399,940
879,793
5,375,400
4.72%
Investment
securities
26,722,691
1,240,368
2,599,234
13,480,736
8,627,507
774,846
4.85%
Investment in
associates and a
joint arrangement
2,961,240
-
-
-
-
2,961,240
Property and
equipment and all
other assets
8,919,691
-
-
-
-
8,919,691
165,464,181
51,494,793
59,683,400
16,880,676
9,507,300
27,898,012
-
Due to banks
(17,776,904)
(8,875,579)
(8,901,325)
-
-
-
1.01%
Customer deposits
(81,958,484) (42,400,300) (17,626,309)
(5,414,230)
-
(16,517,645)
2.25%
Debt securities
(15,285,788)
(1,949,914)
(2,625,214) (9,550,932)
(1,159,728)
-
2.70%
Other borrowings
(15,718,753)
(2,456,072)
(4,982,466)
(8,280,215)
-
-
1.69%
Other liabilities
(10,651,030)
-
-
-
- (10,651,030)
Equity
(24,073,222)
-
-
-
- (24,073,222)
(165,464,181) (55,681,865)
(34,135,314) (23,245,377)
(1,159,728)
(51,241,897)
-
Interest rate
sensitivity gap
-
(4,187,072)
25,548,086
(6,364,701)
8,347,572 (23,343,885)
-
Cumulative Interest
rate sensitivity gap
-
(4,187,072)
21,361,014
14,996,313 23,343,885
-
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
133
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk – non – trading portfolio (continued)
Sensitivity analysis
The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of
the Group’s financial assets and liabilities to various standard and non-standard interest rate scenarios. Standard
scenarios that are considered on a monthly basis include a 25 basis point (bp) parallel fall or rise in all yield curves
worldwide and a 25 bp rise or fall in the greater than 12-month portion of all yield curves. An analysis of the Group’s
sensitivity to an increase or decrease in market interest rates, assuming no a symmetrical movement in yield curves
and a constant financial position, is as follows:
Sensitivity of net interest income
25 bp parallel
increase
25 bp parallel
decrease
2022
At 31 December
62,644
(62,644)
Average for the year
51,971
(51,971)
2021
At 31 December
39,239
(39,239)
Average for the year
61,972
(61,972)
Sensitivity to reported Fair value reserve in equity of interest rate
movements
25 bp parallel
increase
25 bp parallel
decrease
2022
At 31 December
757
(757)
Average for the year
464
(464)
2021
At 31 December
471
(471)
Average for the year
614
(614)
Interest rate movements affect reported equity in the following ways:
•
Retained earnings arising from increases or decreases in net interest income and the fair value changes reported
in profit or loss; and
•
Fair value reserves arising from increases or decreases in fair values of debt securities which are reported directly
in other comprehensive income.
Overall non-trading interest rate risk positions are managed by Group Treasury, which uses investment securities,
advances to banks, deposits from banks and derivative instruments to manage the overall position arising from the
Group’s non-trading activities.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
134
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk – non – trading portfolio (continued)
Inter Bank Offered Rate (IBOR) Reforms
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of
some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’). The Group
has exposures to IBORs on its financial instruments that have been replaced or reformed as part of these market-wide
initiatives.
The majority of LIBOR and other Interbank Offer Rates are to be discontinued after 31 December 2021 and replaced
with certain Alternative Benchmark Rates, with the exception of certain USD LIBOR rates where cessation is delayed
until 30 June 2023.
The Group has exposures to IBORs on its financial instruments that have been and will be replaced or reformed as part
of these market-wide initiatives. The Bank has established a cross-functional IBOR steering committee sponsored by
the Executive Management which is evaluating the IBORs related exposure. The Steering committee is managing the
transition activities to the alternative reference rates by engaging with various stakeholders to support an orderly
transition and mitigating risks resulting from the transition. The project is under the governance of the Chief Risk Officer.
The IBOR Steering Committee oversights the IBOR transition process in its entirety, including product development,
legal considerations, system enhancements, operational readiness, staff awareness and customer communication.
Derivatives
The Group holds interest rate swaps for risk management purposes which are designated in cash flow hedging
relationships. The interest rate swaps have floating legs that are indexed principally to LIBOR. The Group’s derivative
instruments are governed by contracts based on the International Swaps and Derivatives Association (ISDA)’s master
agreements.
Hedge Accounting
The Group has evaluated the extent to which its cash flow hedging relationships are subject to uncertainty driven by
IBOR reform as at 31 December 2022. The Group’s hedged items and hedging instruments continue to be indexed
principally to LIBOR. These benchmark rates are quoted each day and the IBOR cash flows are exchanged with
counterparties as usual. The Group’s LIBOR cash flow hedging relationships extend beyond the anticipated cessation
date for LIBOR.
Total amounts of unreformed contracts, including those with an appropriate fallback clause
The Group monitors the progress of transition from LIBORs to new benchmark rates by reviewing the total amounts of
contracts that have yet to transition to an alternative benchmark rate and the amounts of such contracts that include an
appropriate fallback clause. The following table shows the contracts depending on the inclusion of fallback language
and the expected transition. The amounts of financial assets and financial liabilities are shown at their carrying amounts
and derivatives are shown at their notional amounts.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
135
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk – non – trading portfolio (continued)
Subject to LIBOR transition without fallback clauses
Not subject to
LIBOR transition,
already
incorporate ARR
or with fallback
clauses
USD LIBOR -
maturity
before
expected
transition
USD LIBOR -
maturity after
expected
transition
Total
ASSETS
Cash and balances with central banks
8,030,334
8,030,334
Due from banks
20,843,798
20,843,798
Loans and advances to customers
84,783,217
607,316
12,625,649
98,016,182
Investment securities
29,835,260
29,835,260
Investment in associates and a joint
arrangement
3,101,753
3,101,753
Property and equipment
3,050,360
3,050,360
Intangible assets
66,040
66,040
Other assets
6,176,856
6,176,856
TOTAL ASSETS
155,887,618
607,316
12,625,649
169,120,583
LIABILITIES
Due to banks
23,850,966
203,048
24,054,014
Customer deposits
83,167,492
83,167,492
Debt securities
10,546,876
167,440
10,714,316
Other borrowings
8,714,126
7,227,401
15,941,527
Other liabilities
9,723,904
9,723,904
TOTAL LIABILITIES
136,003,364
203,048
7,394,841
143,601,253
Derivatives
57,886,117
-
4,154,303
62,040,420
57,886,117
-
4,154,303
62,040,420
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
136
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(iii) Exposure to other market risks – non-trading portfolios
Foreign currency transactions
The Group monitors any concentration risk in relation to any individual currency in regard to the translation of foreign
currency transactions and monetary assets and liabilities. The table shows the net foreign currency exposure by major
currencies at the end of the reporting period along with the sensitivities if there were to be a change in the currency
exchange rate.
Net foreign currency exposure:
2022
2021
Pound Sterling
(22,525)
36,406
Euro
(172,571)
1,231,417
USD
(35,650,200)
(35,972,238)
TRY
941,442
853,839
Other currencies
2,863,401
3,341,967
Increase (decrease) in
profit or loss
Increase (decrease) in
fair value reserve
5% increase in currency exchange rate
2022
2021
2022
2021
Pound Sterling
(1,126)
1,820
-
-
Euro
(8,629)
61,571
-
-
USD
(1,782,510)
(1,798,612)
-
-
TRY
47,072
42,692
4,031
19,402
Other currencies
143,710
167,098
-
-
Open exchange position in other currencies represents Group’s investment in associates and a joint arrangement
denominated in OMR and AED.
Equity price risk
Equity price risk is the risk that the fair value of equities decreases as a result of changes in the equity indices and
individual stocks The non-trading equity price risk exposure arises from equity securities classified as fair value through
other comprehensive income. A 10 per cent increase in the Qatar Exchange market index at 31 December 2022 would
have increased equity by QAR 123 million (2021: QAR 1 million). An equivalent decrease would have resulted in an
equivalent but opposite impact.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
137
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(iii) Exposure to other market risks – non-trading portfolios (continued)
Equity price risk (continued)
The Group is also exposed to equity price risk and the sensitivity analysis there of is as follows:
2022
2021
Increase / (decrease) in other comprehensive income:
Qatar Exchange
17,267
8
The above analysis has been prepared on the assumption that all other variables such as interest rate, foreign exchange
rate, etc. are held constant and is based on historical correlation of the equity securities to the relevant index. Actual
movement may be different from the one stated above and is subject to impairment assessment at the end of each
reporting period.
(e) Operational risks
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s
involvement with financial instruments, including processes, personnel, technology and infrastructure, and from external
factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and
generally accepted standards of corporate behavior.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group’s reputation with overall cost effectiveness and to avoid Control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address Operational risk is assigned to
senior management within each business unit. This responsibility is supported by the development of overall Group
standards for the management of operational risk in the following areas:
•
requirements for appropriate segregation of duties, including the independent authorization of transactions;
•
requirements for the reconciliation and monitoring of transactions;
•
compliance with regulatory and other legal requirements;
•
documentation of controls and procedures;
•
requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to
address the risks identified;
•
requirements for the reporting of operational losses and proposed remedial action;
•
development of contingency plans;
•
training and professional development;
•
ethical and business standards; and
•
risk mitigation, including insurance where this is effective.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
138
4. FINANCIAL RISK MANAGEMENT (continued)
(f) Capital management
Regulatory capital
The Group’s policy is to maintain a strong capital base so as to ensure investor, creditor and market confidence and to
sustain future development of the business. The adequacy of the Group’s capital is monitored using, among other measures,
the rules and ratios established by the Basel Committee on Banking Supervision and adopted by Qatar Central Bank in
supervising the Group.
The primary objectives of the Group’s capital management are to ensure that the Group complies with externally imposed
capital requirements and that the Group maintains strong credit ratings and healthy capital ratios in order to support its
business and to maximise shareholders’ value. The Group and its individually regulated operations have complied with all
externally imposed capital requirements throughout the period. The Capital Adequacy Ratio (CAR) of the group is calculated
in accordance with the Basel Committee guidelines as adopted by Qatar Central Bank (QCB). From 1st January 2014 QCB
adopted Basel III guidelines for CAR calculation.
The Group’s regulatory capital position under Basel III QCB regulations as at 31 December was as follows:
Basel III
2022
Basel III
2021
Common Equity Tier 1 (CET 1) Capital
14,534,849
13,631,019
Additional Tier 1 Capital
4,983,528
4,983,528
Tier 1 Capital
19,518,377
18,614,547
Tier 2 Capital
2,171,251
2,418,374
Total Eligible Capital
21,689,628
21,032,921
Risk Weighted Assets for Credit Risk
115,460,043
106,974,791
Risk Weighted Assets for Market Risk
1,901,291
1,453,281
Risk Weighted Assets for Operational Risk
8,114,031
7,488,468
Total Risk Weighted Assets
125,475,365
115,916,540
Total Capital Ratio
17.3%
18.1%
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
139
4. FINANCIAL RISK MANAGEMENT (continued)
(f) Capital management (continued)
CET 1 ratio
Without
Capital
Conservation
buffer
CET 1 ratio
Including
Capital
Conservation
buffer
Tier 1 capital
ratio including
capital
conservation
buffer
Tier 1 and 2
capital ratio
including
capital
conservation
buffer
Total capital
including
capital
conservation
buffer and
DSIB’ buffer
Total capital
including
conservation
buffer, DSIB’
buffer and
ICAAP Pillar II
capital charge
2022
Actual
11.6%
11.6%
15.6%
17.3%
17.3%
17.3%
Minimum QCB limit
6.0%
8.5%
10.5%
12.5%
13.0%
14.0%
2021
Actual
11.7%
11.7%
16.0%
18.1%
18.1%
18.1%
Minimum QCB limit
6.0%
8.5%
10.5%
12.5%
13.0%
14.0%
5. USE OF ESTIMATES AND JUDGMENTS
(a) Key sources of estimation uncertainty
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
(i) Going concern
The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied
that the Group has resources to continue in the business for the foreseeable future. Furthermore, the management is
not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going
concern. Therefore, the financial statements continue to be prepared on the going concern basis.
(ii) Allowances for credit losses
Assessment of whether credit risk on the financial assets has increased significantly since initial recognition and
incorporation of forward looking information in the measurement of ECL, refer to note 4(b)(viii).
(iii) Determing fair values
The determination of fair value for financial assets and liabilities for which there is no observable market price requires
the use of valuation techniques as described in the accounting policy. For financial instruments that trade infrequently
and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on
liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific
instrument.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
140
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(a) Key sources of estimation uncertainty (continued)
(iii) Determing fair values (continued)
Where the fair values of financial assets and financial liabilities cannot be derived from active markets, they are
determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these
models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is
required in establishing fair values. The judgments include considerations of liquidity and model inputs such as
correlation and volatility for longer dated derivatives.
(iv) Goodwill impairment
Goodwill is tested annually for impairment; assets are grouped together into smallest group of assets that generates
cash inflows from continuing use that is largely independent of the cash inflows of other assets or Cash Generating
Units (CGUs). Goodwill arising from a business combination is allocated to the CGU which is expected to benefit from
the synergies of the combination.
The ‘recoverable amount’ of an asset or CGU is the greater of its value in use and its fair value less costs to sell. ‘Value in
use’ is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
(b) Critical accounting judgements in applying the Group’s accounting policies
The spread of coronavirus (“COVID-19”) pandemic has severely impacted various economies globally, causing disruption to
business and economic activities. This has resulted in a global economic slowdown with uncertainties in the economic
environment. Global stock markets have also experienced great volatility and a significant weakening. Governments and
central banks have responded with monetary and fiscal interventions to stabilize economic conditions.
The Group is actively monitoring the COVID 19 situation and in response to this outbreak CBQ, has activated its business
continuity plan and various other risk management practices to manage the potential business disruption on its operations
and financial performance.
In preparing the consolidated financial statements, significant judgements made by management in applying the Group’s
accounting policies and the key sources of estimation uncertainty were impacted by the potential impacts of the current
economic volatility in determination of the reported amounts of the Group’s financial and non-financial assets and these are
considered to represent management’s best assessment based on available or observable information. Markets however
remain volatile and the recorded amounts remain sensitive to market fluctuations.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
141
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(b) Critical accounting judgements in applying the Group’s accounting policies (continued)
(i) Valuation of financial instruments
The Group’s accounting policy on fair value measurements is discussed in the significant accounting policies section
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements.
•
Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
•
Level 2: Inputs other than quoted prices included within Level1 that are observable either directly (i.e.as prices) or
indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in
active markets for similar instruments; quoted prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly
observable from market data.
•
Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique
includes inputs not based on observable data and the unobservable inputs have a significant effect on the
instrument’s valuation. This category includes instruments that are value based on quoted prices for similar
instruments for which significant unobservable adjustments or assumptions are required to reflect differences
between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices
or dealer price quotations. For all other financial instruments, the Group determines fair values using valuation
techniques. Valuation techniques include net present value and discounted cash flow models and comparison to
similar instruments for which market observable prices exist.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
142
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(b) Critical accounting judgements in applying the Group’s accounting policies (continued)
(i) Valuation of financial instruments (continued)
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in
the fair value hierarchy into which the fair value measurement is categorised:
Level 1
Level 2
Level 3
Carrying
amount
2022
Derivative assets
-
936,075
-
936,075
Investment securities
3,181,459
5,560,470
79,789
8,821,718
3,181,459
6,496,545
79,789
9,757,793
Derivative liabilities
-
826,234
-
826,234
-
826,234
-
826,234
Level 1
Level 2
Level 3
Carrying
amount
2021
Derivative assets
-
873,873
-
873,873
Investment securities
2,228,265
6,485,572
23,716
8,737,553
2,228,265
7,359,445
23,716
9,611,426
Derivative liabilities
-
710,720
-
710,720
-
710,720
-
710,720
There have been no transfers between level 1 and level 2
Reconciliation of level 3 investments are as follows:
2022
2021
Balance at 1 January
23,716
36,320
Cost movement
57,068
1,092
Profit and loss movement
(995)
(13,696)
Balance at 31 December
79,789
23,716
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
143
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(b) Critical accounting judgements in applying the Group’s accounting policies (continued)
(ii) Financial asset and liability classification
Assessment of the business model within which the assets are held and assessment of whether the contractual terms
of the financial asset are solely payments of principal and interest on the principal amount outstanding. Refer to note
3 (d) (ii) for further information.
(iii) Qualifying hedge relationships
In designating financial instruments in qualifying hedge relationships, the Group has determined that it expects the
hedges to be highly effective over the period of the hedging relationship.
(iv) Impairment of investments in equity and debt securities
Assessment of whether credit risk on the financial asset has increased significantly since initial recognition and
incorporation of forward –looking information in the measurement of ECL. Refer to note 4 (b) (viii) Inputs, assumptions
and techniques used for estimating impairment of financial assets for more information.
(v) Useful life of intangible assets
The Group’s management determines the estimated useful life of its intangible assets for calculating amortization.
This estimate is determined after considering the expected economic benefits from the use of intangible assets.
(vi) Fair value of land and buildings
The fair value of land and building is determined by valuations from an external professional real estate valuer using
recognized valuation techniques and the principles of IFRS 13 “Fair Value Measurement”
(vii) Leases - Estimating the incremental borrowing rate
The Group uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the
Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an
asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the
Group ‘would have to pay’, which requires estimation when no observable rates are available or when they need to be
adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable inputs (such
as market interest rates).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
144
6. OPERATING SEGMENTS
For management purposes, the Group is divided into four operating segments, which are based on business lines, together
with its associates and a joint arrangement companies, as follows:
Qatar operations:
1.
Wholesale Banking provides an extensive range of conventional funded and non-funded credit facilities, demand
and time deposit services, currency exchange facilities, interest rate swaps and other derivative trading services, loan
syndication and structured financing services to corporate, commercial and multinational customers. Money market
funds and proprietary investment portfolio are also managed by this operating segment.
2. Retail Banking provides personal current, savings, time and investment account services, credit card and debit card
services, consumer and vehicle loans, residential mortgage services, custodial services to retail and individual
customers and brokerage services provided by Commercialbank Financial Services L.L.C. wholly owned subsidiary
operating in Qatar.
3. Others include subsidiaries and joint arrangement operating in Qatar.
International:
4. Alternatif Bank: A subsidiary that provides banking services through its branch network in Turkey. Alternatif bank also
has its subsidiaries. The Group reported Abank group result under this operating segment.
5. Investment in associates includes strategic investments in the National Bank of Oman in the Sultanate of Oman, United
Arab Bank in the United Arab Emirates.
All Associates and joint arrangement Companies are accounted for under the equity method.
Unallocated assets, liabilities and revenues are related to certain central functions and non-core business operations. (For
example, Group headquarters, common property & equipment, cash functions and net of intra-group transactions).
Management monitors the results of the operating segments separately to make decisions about resource allocation and
performance assessment. Transfer prices between operating segments are on an arm’s length basis.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
145
6. OPERATING SEGMENTS (continued)
(a) By operating segment
Segment assets and liabilities comprise operating assets and liabilities which are directly handled by the operating segment
and income or expenses are attributed with the assets and liabilities’ ownership. The following table summarizes
performance of the operating segments:
2022
Qatar Operations
Wholesale
Banking
Retail
Banking
Others International
Unallocated
and Intra-
group
transactions
Total
Net interest income
2,762,038
935,202
1,291
416,268
(8,790)
4,106,009
Net fee, commission and
other income
275,508
662,856
44,347
138,579
66,700
1,187,990
Segmental revenue
3,037,546
1,598,058
45,638
554,847
57,910
5,293,999
Net Impairment losses on
investment securities
(11,480)
-
-
58
-
(11,422)
Net impairment losses on
loans and advances to
customers and other financial
assets
(1,049,102)
(94,733)
-
7,572
-
(1,136,263)
Segmental profit
1,318,791
1,017,873
(173,294)
31,464
393,978
2,588,812
Impairment for investment in
an associate
-
-
-
-
-
-
Share of results of associates
and a joint arrangement
-
-
1,916
220,380
-
222,296
Net profit for the year
1,318,791
1,017,873
(171,378)
251,844
393,978
2,811,108
Other information
Loans and advances to
customers
81,135,167
9,803,021
-
7,077,994
-
98,016,182
Investments in associates and
a joint arrangement
-
-
7,358
3,094,395
-
3,101,753
Assets (other than above)
56,799,132
1,833,908
314,580
4,057,057
4,997,971 68,002,648
169,120,583
Customer deposits
51,612,802
26,019,560
-
6,169,806
(634,676)
83,167,492
Liabilities (other than above)
53,356,068
2,054,379
319,001
3,983,249
721,064
60,433,761
143,601,253
Contingent items
18,925,661
1,742,615
560,000
3,293,085
-
24,521,361
Intra-group transactions are eliminated from this segmental information (Assets: QAR 4,717 million, Liabilities: QAR 2,219
million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
146
6. OPERATING SEGMENTS (continued)
(a) By operating segment (continued)
2021
Qatar Operations
Wholesale
Banking Retail Banking
Others
International
Unallocated
and Intra-
group
transactions
Total
Net interest income
2,681,775
789,829
781
235,125
(5,981)
3,701,529
Net fee, commission and other
income
597,316
588,825
44,853
105,212
62,975
1,399,181
Segmental revenue
3,279,091
1,378,654
45,634
340,337
56,994
5,100,710
Net Impairment reversal on
investment securities
(2,335)
-
-
(42)
-
(2,377)
Net impairment losses on loans
and advances to customers
and other financial assets
(928,302)
(80,258)
-
(68,374)
-
(1,076,934)
Segmental profit
1,663,715
811,537
(22,266)
23,727
(10,713)
2,466,000
Impairment for investment in
an associate
-
-
-
(291,000)
-
(291,000)
Share of results of associates
and a joint arrangement
-
-
1,491
127,763
-
129,254
Net profit for the year
1,663,715
811,537
(20,775)
(139,510)
(10,713)
2,304,254
Other information
Loans and advances to
customers
78,543,875
11,788,933
-
7,670,355
-
98,003,163
Investments in associates and
a joint arrangement
-
-
6,943
2,954,297
-
2,961,240
Assets (other than above)
48,707,937
1,481,502
348,825
5,190,145
8,771,369
64,499,778
165,464,181
Customer deposits
50,004,429
25,572,835
-
7,038,209
(656,989)
81,958,484
Liabilities (other than above)
51,195,342
1,989,379
298,399
5,110,185
839,170
59,432,475
141,390,959
Contingent items
18,808,826
219,448
560,000
4,067,992
-
23,656,266
Intra-group transactions are eliminated from this segmental information (Assets: QAR 2,725 million, Liabilities: QAR 2,109
million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
147
6. OPERATING SEGMENTS (continued)
(b) By geography
Consolidated statement
of financial position
Qatar
Other GCC
countries
Other
Middle East
Europe
North
America
Rest of the
world
Total
2022
Cash and balances with
central banks
6,681,125
-
1,349,209
-
-
-
8,030,334
Due from banks
3,100,799
1,393,879
2,570,565
7,648,301
1,193,600
4,936,654
20,843,798
Loans and advances to
customers
83,654,363
1,452,555
9,911,879
892,727
535,377
1,569,281
98,016,182
Investment securities
25,165,941
1,725,760
1,220,757
234,565
166,637
1,321,600
29,835,260
Investment in associates
and a joint arrangement
7,359
3,094,394
-
-
-
-
3,101,753
Property and equipment
and all other assets
8,510,786
-
782,470
-
-
-
9,293,256
Total assets
127,120,373 7,666,588 15,834,880
8,775,593
1,895,614
7,827,535 169,120,583
Due to banks
1,612,813
1,583,515
4,085,054
9,849,931
66,542
6,856,159
24,054,014
Customer deposits
65,587,926
1,603,459
5,974,737
3,679,476
669,146
5,652,748
83,167,492
Debt securities
-
-
816,827
9,897,489
-
-
10,714,316
Other borrowings
1,878,761
4,654,475
526,785
2,132,845
3,166,568
3,582,093
15,941,527
Other liabilities
9,188,498
-
534,344
-
-
1,062
9,723,904
Equity
24,550,007
-
969,323
-
-
-
25,519,330
Total liabilities and
equity
102,818,005
7,841,449 12,907,070 25,559,741 3,902,256 16,092,062 169,120,583
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
148
6. OPERATING SEGMENTS (continued)
(b) By geography (continued)
Consolidated statement
of income
Qatar
Other GCC
countries
Other
Middle East
Europe
North
America
Rest of the
world
Total
Year ended
31 December 2022
Net interest income
3,966,872
41,665
705,496
(406,632)
(13,227)
(188,165)
4,106,009
Net fee, commission and
other income
1,139,999
(23,350)
174,787
(77,229)
(527)
(25,690)
1,187,990
Net operating income
5,106,871
18,315
880,283
(483,861)
(13,754)
(213,855) 5,293,999
Staff cost
(494,759)
-
(100,422)
-
-
-
(595,181)
Depreciation
(209,185)
-
(23,712)
-
-
-
(232,897)
Amortization of intangible
assets
(46,268)
-
(23,017)
-
-
-
(69,285)
Net impairment losses on
investment securities
(11,480)
-
58
-
-
-
(11,422)
Net impairment losses on
loans and advances to
customers
(990,277)
-
2,668
-
-
-
(987,609)
Net impairment losses on
other financial assets
(153,559)
-
4,905
-
-
-
(148,654)
Other Provision
(71,210)
-
(44,486)
-
-
-
(115,696)
Other expenses
(202,842)
-
(37,778)
-
-
(98)
(240,718)
Profit before net monetary
loss and share of results of
associates and a joint
arrangement
2,927,291
18,315
658,499
(483,861)
(13,754)
(213,953) 2,892,537
Net monetary losses due
to hyperinflation
-
-
(189,380)
-
-
-
(189,380)
Share of results of
associates and a joint
arrangement
1,915
220,381
-
-
-
-
222,296
Profit for the year
before tax
2,929,206
238,696
469,119
(483,861)
(13,754)
(213,953) 2,925,453
Income tax expenses
(2,119)
-
(112,218)
-
-
(8)
(114,345)
Net profit for the year
2,927,087
238,696
356,901
(483,861)
(13,754)
(213,961)
2,811,108
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
149
6. OPERATING SEGMENTS (continued)
(b) By geography (continued)
Consolidated statement of
financial position
Qatar
Other GCC
countries
Other Middle
East
Europe
North
America
Rest of the
world
Total
2021
Cash and balances with
central banks
15,901,765
-
2,013,620
-
-
-
17,915,385
Due from banks
1,109,795
157,668
3,864,512
3,211,893
1,676,459
921,684
10,942,011
Loans and advances to
customers
80,729,496
1,162,509 10,832,955
1,761,993
443,577
3,072,633 98,003,163
Investment securities
20,445,207
1,542,569
3,117,500
125,505
11,915
1,479,995
26,722,691
Investment in associates
and a joint arrangement
6,943
2,954,297
-
-
-
-
2,961,240
Property and equipment
and all other assets
8,079,724
-
839,967
-
-
-
8,919,691
Total assets
126,272,930
5,817,043 20,668,554
5,099,391
2,131,951
5,474,312 165,464,181
Due to banks
4,076,931
568,515
2,648,798
7,091,097
457,191
2,934,372
17,776,904
Customer deposits
57,532,032
570,347
6,977,103
7,294,193
1,843,482
7,741,327 81,958,484
Debt securities
-
-
954,792 14,330,996
-
- 15,285,788
Other borrowings
2,420,404
3,280,901
1,930,285
1,559,278
3,359,834
3,168,051
15,718,753
Other liabilities
9,931,897
-
718,072
-
-
1,061 10,651,030
Equity
23,361,111
-
712,111
-
-
- 24,073,222
Total liabilities and equity
97,322,375
4,419,763
13,941,161 30,275,564
5,660,507
13,844,811 165,464,181
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
150
6. OPERATING SEGMENTS (continued)
(b) By geography (continued)
Consolidated statement
of income
Qatar
Other GCC
countries
Other Middle
East
Europe
North
America
Rest of the
world
Total
Year ended 31 December
2021
Net interest income
3,545,889
68,801
501,413
(441,772)
(22,018)
49,216
3,701,529
Net fee, commission and
other income
1,252,404
4,861
132,414
7,882
1,266
354
1,399,181
Net operating income
4,798,293
73,662
633,827 (433,890)
(20,752)
49,570
5,100,710
Staff cost
(843,954)
-
(103,067)
-
-
-
(947,021)
Depreciation
(195,154)
-
(18,200)
-
-
-
(213,354)
Amortization of intangible
assets
(46,269)
-
(12,581)
-
-
-
(58,850)
Net impairment losses on
investment securities
(2,335)
-
(42)
-
-
-
(2,377)
Net impairment losses on
loans and advances to
customers
(1,009,889)
-
(89,530)
-
-
- (1,099,419)
Net impairment losses on
other financial assets
1,329
-
21,156
-
-
-
22,485
Impairment on Investment
in an Associate
-
(291,000)
-
-
-
-
(291,000)
Other Provision
(21,697)
-
(45,529)
-
-
-
(67,226)
Other expenses
(199,018)
-
(61,224)
-
-
(101)
(260,343)
Profit before share of
results of associates and a
joint arrangement
2,481,306
(217,338)
324,810 (433,890)
(20,752)
49,469
2,183,605
Share of results of
associates and a joint
arrangement
1,490
127,764
-
-
-
-
129,254
Profit for the year before
tax
2,482,796
(89,574)
324,810 (433,890)
(20,752)
49,469
2,312,859
Income tax expenses
(1,008)
-
(7,592)
-
-
(5)
(8,605)
Net profit for the year
2,481,788
(89,574)
317,218 (433,890)
(20,752)
49,464 2,304,254
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
151
7. FINANCIAL ASSETS AND LIABILITIES
Accounting classifications and fair values
The table below sets out the carrying amounts and fair values of the Group’s financial assets and financial liabilities:
Consolidated statement
of financial position
Fair value through
Profit & loss
Fair value through other
comprehensive income
2022
Debt
instruments
Equity
instruments
Debt
instruments
Equity
instruments
Amortised
Cost
Total
carrying
amount
Fair value
Cash and balances with
central banks
-
-
-
-
8,030,334
8,030,334
8,030,334
Due from banks
-
-
-
-
20,843,798
20,843,798
20,843,798
Loans and advances to
customers
-
-
-
-
98,016,182
98,016,182
98,016,182
Investment securities
2,407,398
118,249
4,910,391
1,554,844
20,844,378
29,835,260
29,526,146
2,407,398
118,249
4,910,391 1,554,844 147,734,692 156,725,574 156,416,460
Due to banks
-
-
-
-
24,054,014
24,054,014
24,054,014
Customer deposits
-
-
-
-
83,167,492
83,167,492
83,167,492
Debt securities
-
-
-
-
10,714,316
10,714,316
10,524,757
Other borrowings
-
-
-
-
15,941,527
15,941,527
15,941,527
-
-
-
- 133,877,349 133,877,349 133,687,790
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
152
7. FINANCIAL ASSETS AND LIABILITIES (continued)
Accounting classifications and fair values (continued)
The table below sets out the carrying amounts and fair values of the Group’s financial assets and financial liabilities:
Consolidated statement of
financial position
Fair value through
Profit & loss
Fair value through other
comprehensive income
2021
Debt
instruments
Equity
instruments
Debt
instruments
Equity
instruments
Amortised
Cost
Total carrying
amount
Fair value
Cash and balances with
central banks
-
-
-
-
17,915,385
17,915,385
17,915,385
Due from banks
-
-
-
-
10,942,011
10,942,011
10,942,011
Loans and advances to
customers
-
-
-
-
98,003,163
98,003,163
98,003,163
Investment securities:
2,713,488
68,246
5,656,873
411,020
17,873,064
26,722,691
26,755,550
2,713,488
68,246
5,656,873
411,020
144,733,623 153,583,250
153,616,109
Due to banks
-
-
-
-
17,776,904
17,776,904
17,776,904
Customer deposits
-
-
-
-
81,958,484
81,958,484
81,958,484
Debt securities
-
-
-
-
15,285,788
15,285,788
15,633,017
Other borrowings
-
-
-
-
15,718,753
15,718,753
15,718,753
-
-
-
- 130,739,929 130,739,929
131,087,158
8. CASH AND BALANCES WITH CENTRAL BANKS
2022
2021
Cash
2,681,299
6,356,491
Cash reserve with central banks *
4,641,919
4,483,446
Other balances with central banks
707,085
7,069,901
8,030,303
17,909,838
Accrued interest
31
5,547
8,030,334
17,915,385
* The cash reserve with central banks is a mandatory reserve and is not available for use in the Group’s day to day operations.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
153
9. DUE FROM BANKS
2022
2021
Current accounts
10,755,276
5,553,178
Placements
5,790,113
1,593,990
Loans to banks
4,368,340
3,875,510
20,913,729
11,022,678
Accrued interest
10,574
1,575
Allowance for impairment of due from bank
(80,505)
(82,242)
20,843,798
10,942,011
10. LOANS AND ADVANCES TO CUSTOMERS
(a) By type
2022
2021
Loans
89,950,630
85,370,349
Overdrafts
8,151,876
10,692,164
Bills discounted
112,004
72,395
Bankers acceptances
4,305,125
5,375,400
102,519,635
101,510,308
Deferred profit
(3,088)
(3,929)
102,516,547
101,506,379
Accrued interest
820,195
1,158,837
Allowance for impairment of loans and advances to customers**
(3,578,370)
(2,989,970)
ECL on loans and advances to customers
(1,742,190)
(1,672,083)
Net loans and advances to customers *
98,016,182
98,003,163
*The aggregate amount of non-performing loans and advances to customers amounted QAR 5,046 million which
represents 4.9% of total loans and advances to customers (2021: QAR 4,786 million 4.7% of total loans and advances to
customers).
**Allowance for impairment of loans and advances to customers includes QAR 638 million of interest in suspense (2021:
QAR 611 million).
Modified financing assets
The Group has allowed delayed repayments of certain customers in line with the QCB instructions issued to local banks in
Qatar. The modification loss on these loans was not considered to be material for the year.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
154
10. LOANS AND ADVANCES TO CUSTOMERS (continued)
(b) By sector
2022
Loans
Overdrafts
Bills
discounted
Bankers
acceptances
Total
Government and related agencies
11,642,600
4,137,238
-
-
15,779,838
Non-banking financial institutions
1,414,616
-
-
-
1,414,616
Industry
8,095,001
3,222
-
9,703
8,107,926
Commercial
14,376,515
329,271
6,806
2,821,777
17,534,369
Services
24,547,160
1,763,735
36,392
1,003,466
27,350,753
Contracting
2,894,044
590,971
68,806
390,396
3,944,217
Real estate
20,781,059
82,921
-
-
20,863,980
Personal
4,951,266
1,224,033
-
-
6,175,299
Others
1,248,369
20,485
-
79,783
1,348,637
89,950,630
8,151,876
112,004
4,305,125
102,519,635
Accrued interest
820,195
Less: Deferred profit
(3,088)
Allowance for impairment of loans and advances to customers
(3,578,370)
ECL on loans and advances to customers
(1,742,190)
(4,503,453)
Net loans and advances to customers
98,016,182
2021
Loans
Overdrafts
Bills
discounted
Bankers
acceptances
Total
Government and related agencies
11,543,044
6,592,047
-
-
18,135,091
Non-banking financial institutions
428,415
1,831
-
-
430,246
Industry
8,515,398
6,612
3,957
3,983
8,529,950
Commercial
13,931,294
387,289
7,134
3,039,070
17,364,787
Services
25,629,524
1,235,249
35,617
1,722,079
28,622,469
Contracting
2,822,900
558,323
25,687
514,789
3,921,699
Real estate
18,435,242
324,364
-
-
18,759,606
Personal
2,605,236
1,561,403
-
-
4,166,639
Others
1,459,294
25,046
-
95,481
1,579,821
85,370,347
10,692,164
72,395
5,375,402
101,510,308
Accrued interest
1,158,837
Less: Deferred profit
(3,929)
Allowance for impairment of loans and advances to customers
(2,989,970)
ECL on loans and advances to customers
(1,672,083)
(3,507,145)
Net loans and advances to customers
98,003,163
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
155
10. LOANS AND ADVANCES TO CUSTOMERS (continued)
(c) Movement in allowance for impairment of loans and advances to customers
2022
2021
Balance at 1 January
4,662,053
4,396,622
Allowance made during the year
1,348,214
1,792,893
Recoveries / reversals during the year
(139,461)
(514,081)
Net allowance for impairment during the year *
1,208,753
1,278,812
Written off / transferred during the year
(458,600)
(837,654)
Exchange differences
(91,646)
(175,727)
Balance at 31 December
5,320,560
4,662,053
*This includes net interest suspended during the year QAR 133.8 million (2021: QAR 139.9 million) as per QCB regulations.
Net impairment losses on loans and advances to customers
2022
2021
Gross allowance made during the year
1,348,214
1,792,893
Less: Recoveries / reversals during the year
(139,461)
(514,081)
1,208,753
1,278,812
Less: Interest suspended during the year
(133,773)
(139,911)
Less: Recoveries on previously written off loans
(87,371)
(39,482)
987,609
1,099,419
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
156
10. LOANS AND ADVANCES TO CUSTOMERS (continued)
(c) Movement in allowance for impairment of loans and advances to customers (continued)
Commercial Bank
Stage 1
Stage 2
Stage 3
Wholesale
Banking
Retail
Banking
Wholesale
Banking
Retail
Banking
Wholesale
Banking
Retail
Banking
Balance at 1 January 2022
135,888
73,977
1,225,592
108,798
1,409,187
1,438,114
Adjustment due to reclassification
between segments
-
-
-
-
-
-
Allowance made during the year
(31,752)
(2,476)
163,224
3,385
764,183
444,776
Recoveries/reversal during the year
-
-
-
-
(11,461)
(128,000)
Written off / transferred during the year
-
-
-
-
117,691
(576,291)
Exchange differences
-
-
-
-
-
-
Balance at 31 December 2022
104,136
71,501 1,388,816
112,183 2,279,600 1,178,599
Commercial Bank
Stage 1
Stage 2
Stage 3
Wholesale
Banking
Retail
Banking
Wholesale
Banking
Retail
Banking
Wholesale
Banking
Retail
Banking
Balance at 1 January 2021
204,407
72,444
1,008,746
86,353
1,311,312
1,345,153
Adjustment due to reclassification
between segments
-
-
-
-
-
-
Allowance made during the year
(68,519)
1,533
216,846
22,445
871,194
280,252
Recoveries/reversal during the year
-
-
-
-
(9,826)
(124,929)
Written off / transferred during the year
-
-
-
-
(763,493)
(62,362)
Exchange differences
-
-
-
-
-
-
Balance at 31 December 2021
135,888
73,977
1,225,592
108,798
1,409,187
1,438,114
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
157
Subsidiaries
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Total
Commercial
Bank
Alternatif bank
Total
Alternatif
Bank
Others
Total
4,391,556
10,970
115,977
142,669
269,616
881
-
-
4,662,053
-
-
-
-
-
-
-
-
-
1,341,340
(13,870)
(40,148)
60,918
6,900
(26)
-
-
1,348,214
(139,461)
-
-
-
-
-
-
-
(139,461)
(458,600)
-
-
-
-
-
-
-
(458,600)
-
3,589
(11,819)
(83,416)
(91,646)
-
-
-
(91,646)
5,134,835
689
64,010
120,171
184,870
855
-
-
5,320,560
Subsidiaries
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Total
Commercial
Bank
Alternatif bank
Total
Alternatif
Bank
Others
Total
4,028,415
3,767
144,806
207,404
355,977
431
-
11,799
4,396,622
-
-
-
-
-
-
-
-
-
1,323,751
94
32,616
435,982
468,692
450
-
-
1,792,893
(134,755)
-
-
(379,326)
(379,326)
-
-
-
(514,081)
(825,855)
-
-
-
-
-
-
(11,799)
(837,654)
-
7,109
(61,445)
(121,391)
(175,727)
-
-
-
(175,727)
4,391,556
10,970
115,977
142,669
269,616
881
-
-
4,662,053
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
158
11. INVESTMENT SECURITIES
2022
2021
Fair value through other comprehensive income (FVOCI)
6,323,095
5,983,964
Fair value through profit & loss (FVTPL)
2,498,623
2,753,589
Amortised cost (AC)
20,607,181
17,688,500
29,428,899
26,426,053
Accrued interest
406,361
296,638
29,835,260
26,722,691
*The carrying value of investment securities pledged under repurchase agreements (REPO) is QAR 10,317 million (2021:
QAR 8,123 million).
(a) Fair value through other comprehensive income
2022
Quoted
Unquoted
Total
Equities
1,549,646
5,199
1,554,845
State of Qatar debt securities
3,117,351
-
3,117,351
Debt and other securities*
1,650,899
-
1,650,899
Total
6,317,896
5,199
6,323,095
2021
Quoted
Unquoted
Total
Equities
405,821
5,199
411,020
State of Qatar debt securities
3,829,751
-
3,829,751
Debt and other securities*
1,743,193
-
1,743,193
Total
5,978,765
5,199
5,983,964
* Fixed rate securities and floating rate securities amounted to QAR 1,387 million and QAR 264 million respectively (2021:
QAR 1,554 million and QAR 264 million respectively)
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
159
11. INVESTMENT SECURITIES (continued)
(b) Fair value through profit & loss
2022
Quoted
Unquoted
Total
Equities
24,509
69,071
93,580
State of Qatar debt securities
111,000
-
111,000
Debt and other securities
2,269,374
-
2,269,374
Investment funds
8,262
16,407
24,669
Total
2,413,145
85,478
2,498,623
2021
Quoted
Unquoted
Total
Equities
30,735
11,896
42,631
State of Qatar debt securities
111,000
-
111,000
Debt and other securities
2,574,344
-
2,574,344
Investment funds
8,829
16,785
25,614
Total
2,724,908
28,681
2,753,589
(c) Amortised Cost
2022
By Issuer
Quoted
Unquoted
Total
State of Qatar debt securities
16,749,599
-
16,749,599
Debt and other securities
3,788,486
69,096
3,857,582
Total
20,538,085
69,096
20,607,181
2022
By Interest Rate
Quoted
Unquoted
Total
Fixed Rate Securities
20,479,716
69,096
20,548,812
Floating Rate Securities
58,369
-
58,369
Total
20,538,085
69,096
20,607,181
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
160
11. INVESTMENT SECURITIES (continued)
(c) Amortised Cost (continued)
2021
By Issuer
Quoted
Unquoted
Total
State of Qatar debt securities
14,234,890
-
14,234,890
Debt and other securities*
3,428,350
25,260
3,453,610
Total
17,663,240
25,260
17,688,500
2021
By Interest Rate
Quoted
Unquoted
Total
Fixed Rate Securities
17,688,500
-
17,688,500
Floating Rate Securities
-
-
-
Total
17,688,500
-
17,688,500
12. INVESTMENT IN ASSOCIATES AND A JOINT ARRANGEMENT
The Group’s investment in associates and a joint arrangement are as follows:
2022
2021
Balance at 1 January
2,961,240
3,116,557
Share of results -(note 21)
222,296
129,254
Cash dividend - (note 21)
(21,346)
(2,500)
Other movements
(60,437)
8,929
Impairment of investment in an associate
-
(291,000)
Balance at 31 December
3,101,753
2,961,240
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
161
12. INVESTMENT IN ASSOCIATES AND A JOINT ARRANGEMENT (continued)
Ownership %
Price per share
(QAR)
Name of the Entity
Classification
Country
Activities
2022
2021
National Bank of Oman
SAOG (‘NBO’)
Associate
Oman
Banking
34.9%
34.9%
2.73
United Arab Bank PJSC
(‘UAB’)
Associate
UAE
Banking
40.0%
40.0%
0.84
Massoun Insurance
Services L.L.C
Joint venture
Qatar
Insurance
brokerage
50.0%
50.0%
Not Listed
2022
2021
Total assets
54,549,121
53,613,728
Total liabilities
16,087,303
46,865,045
Operating income
1,620,304
1,620,304
Net profit
609,055
355,897
Total comprehensive income
459,236
378,809
Share of results
220,380
127,763
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
162
13. PROPERTY AND EQUIPMENT
Land and
buildings
Right of
use assets
Leasehold
improvements
Furniture
and
equipment
Motor
vehicles
Capital
work in
progress
Total
Cost
Balance at 1 January 2021
2,408,211
528,626
116,572
1,351,999
15,427
229,401
4,650,236
Additions / transfers
16,290
4,497
460
71,130
17,744
73,111
183,232
Revaluation on land & buildings
(269,158)
-
-
-
-
-
(269,158)
Disposals
(101)
(15,213)
(2,233)
(618)
(5,292)
-
(23,457)
Exchange differences
(57,947)
(28,957)
(15,922)
(27,489)
(11,739)
-
(142,054)
Balance at 31 December 2021
2,097,295
488,953
98,877
1,395,022
16,140
302,512
4,398,799
Balance at 1 January 2022
2,097,295
488,953
98,877
1,395,022
16,140
302,512
4,398,799
Additions / transfers
14,294
95,053
733
67,417
2,539
223,365
403,401
Revaluation on land & buildings
63,925
-
-
-
-
-
63,925
Disposals
-
(3,912)
-
-
(335)
-
(4,247)
Exchange differences
(7,250)
(1,224)
9,057
24,318
13,865
-
38,766
Balance at 31 December 2022
2,168,264
578,870
108,667
1,486,757
32,209
525,877 4,900,644
Accumulated depreciation
Balance at 1 January 2021
148,669
58,592
103,345
1,176,877
4,489
-
1,491,972
Depreciation for the year
32,053
100,506
3,079
75,452
2,264
-
213,354
Disposals
-
(3,088)
(1,211)
(457)
(1,994)
-
(6,750)
Exchange differences
(2,388)
(22,033)
(12,054)
(15,304)
(1,337)
-
(53,116)
Balance at 31 December 2021
178,334
133,977
93,159
1,236,568
3,422
-
1,645,460
Balance at 1 January 2022
178,334
133,977
93,159
1,236,568
3,422
-
1,645,460
Depreciation for the year
28,436
106,187
3,273
90,653
4,348
-
232,897
Disposals
-
(4,271)
-
-
(153)
-
(4,424)
Exchange differences
(2,676)
(2,455)
(4,202)
(11,384)
(2,932)
-
(23,649)
Balance at 31 December 2022
204,094
233,438
92,230
1,315,837
4,685
- 1,850,284
Net carrying amounts
Balance at 31 December 2021
1,918,961
354,976
5,718
158,454
12,718
302,512
2,753,339
Balance at 31 December 2022
1,964,170
345,432
16,437
170,920
27,524
525,877 3,050,360
Right of use asset pertains to the following:
2022
2021
Land and buildings
345,432
354,976
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
163
14. INTANGIBLE ASSETS
Goodwill
Brand
Customer
relationship
Core
deposit
Internally
developed
software
Total
Cost
Balance at 1 January 2021
128,837
55,473
302,583
72,682
47,635
607,210
Acquisitions
-
3,375
-
-
18,185
21,560
Exchange differences
(58,389)
(22,125)
15,768
613
(25,714)
(89,847)
Balance at 31 December 2021
70,448
36,723
318,351
73,295
40,106
538,923
Balance at 1 January 2022
70,448
36,723
318,351
73,295
40,106
538,923
Acquisitions
-
326
-
-
22,940
23,266
Exchange differences
(10,643)
(1,882)
23,357
5,603
(601)
15,834
Balance at 31 December 2022
59,805
35,167
341,708
78,898
62,445
578,023
Amortisation and Impairment
Balance at 1 January 2021
49,800
35,200
260,256
58,260
28,864
432,380
Amortisation during the year
-
2,675
36,893
8,323
10,959
58,850
Exchange differences
-
(13,196)
-
1
(14,487)
(27,682)
Balance at 31 December 2021
49,800
24,679
297,149
66,584
25,336
463,548
Balance at 1 January 2022
49,800
24,679
297,149
66,584
25,336
463,548
Amortisation during the year
-
1,403
36,893
8,323
22,666
69,285
Exchange differences
-
(4,766)
-
1
(16,085)
(20,850)
Balance at 31 December 2022
49,800
21,316
334,042
74,908
31,917
511,983
Net carrying amounts
Balance at 31 December 2021
20,648
12,044
21,202
6,711
14,770
75,375
Balance at 31 December 2022
10,005
13,851
7,666
3,990
30,528
66,040
Impairment testing for CGU containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s CGU-Alternatifbank. A cost of equity of 24.7%
(2021: 24.7%) and a terminal growth rate of 2.5% (2021: 2.5%) were used to estimate the recoverable amount of
Alternatifbank.
The recoverable amount for the CGU has been calculated based on the ‘Value in Use Method’, determined by discounting
the future cash flows expected to be generated from the continuing use of the CGU. The discount rate was a pre-tax
measure based on the Government Bonds 10 year yield TL, adjusted for an equity market risk premium and equity beta.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
164
14. INTANGIBLE ASSETS (continued)
Five years of cash flows are included in the discounted cash model. A long term growth rate into perpetuity has been
determined as the lower of the nominal GDP rates for the country in which CGU operate and the long term compound
annual profit before taxes, depreciation and amortization growth rate estimated by the management. The key assumptions
described above may change as economic and market conditions change.
No impairment loss is recognized in 2022 (2021: nil) as the recoverable amount of this CGU was determined to be higher
than its carrying amount.
15. OTHER ASSETS
2022
2021
Accrued income
20,782
17,251
Prepaid expenses
78,589
99,633
Accounts receivable
742,119
479,321
Repossessed collateral*
3,563,808
3,523,860
Positive fair value of derivatives (note 37)
936,075
873,873
Clearing cheques
334,897
206,327
Deferred tax assets (note 33)
19,258
53,449
Others
481,328
837,263
6,176,856
6,090,977
*This represents the value of the properties acquired in settlement of debts, which have been stated at their carrying value
net of any allowance for impairment. The estimated market values of these properties at the end of the reporting period are
not materially different from the carrying values.
16. DUE TO BANKS
2022
2021
Balances due to central banks
961,587
3,038,156
Current accounts
463,275
528,442
Placement with banks
13,297,694
6,564,929
Repurchase agreements with banks
9,264,655
7,631,743
Accrued interest
66,803
13,634
Total
24,054,014
17,776,904
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
165
17. CUSTOMER DEPOSITS
2022
2021
Current and call deposits
26,003,197
24,400,462
Saving deposits
5,948,246
5,901,947
Time deposits
50,732,362
51,418,229
Accrued interest
483,687
237,846
Total
83,167,492
81,958,484
2022
2021
Government
6,212,452
5,010,809
Government and semi government agencies
17,031,685
13,912,585
Individuals
23,217,031
23,028,915
Corporate
28,545,961
28,746,764
Non-banking financial institutions
7,676,676
11,021,565
82,683,805
81,720,638
Accrued interest
483,687
237,846
83,167,492
81,958,484
18. DEBT SECURITIES
2022
2021
EMTN unsecured Programme – Senior unsecured notes *
9,827,802
10,469,133
Senior Notes*
111,456
230,111
Subordinated Notes *
727,437
716,589
Others#
-
3,816,156
Accrued interest
47,621
53,799
Total
10,714,316
15,285,788
* The following table provides the breakdown of the Debt Securities as at close of 31 December 2022.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
166
18. DEBT SECURITIES (continued)
Instrument
Issuer
Issued amount
Issued on Maturity
Coupon
EMTN - Senior notes
CBQ Finance Ltd
USD 500 million *
May-18
May-23
Fixed Rate 5.00%
CBQ Finance Ltd
USD 36 million *
Feb-19
Feb-24
LIBOR + 1.95%
CBQ Finance Ltd
CHF 150 million *
Oct-19
Oct-23
Fixed Rate 0.38%
CBQ Finance Ltd
USD 10 million *
Feb-20
Feb-25
LIBOR + 1.24%
CBQ Finance Ltd
CNH 171 million *
Aug-20
Aug-23
Fixed Rate 4%
CBQ Finance Ltd
HKD 660 million *
Aug-20
Aug-25
Fixed Rate 2.06%
CBQ Finance Ltd
USD 500 million *
Sep-20
Sep-25
Fixed Rate 2.06%
CBQ Finance Ltd
JPY 1 billion *
Sep-20
Sep-23
Fixed Rate 0.60%
CBQ Finance Ltd
JPY 1 billion *
Nov-20
Nov-23
Fixed Rate 0.60%
CBQ Finance Ltd
JPY 1.5 billion *
Nov-20
Nov-23
Fixed Rate 0.65%
CBQ Finance Ltd
USD 10 million *
Nov-20
Nov-23
Fixed Rate 1.48%
CBQ Finance Ltd
CHF 185 million *
Nov-20
Nov-24
Fixed Rate 0.745%
CBQ Finance Ltd
USD 10 million *
Dec-20
Dec-23
Fixed Rate 1.5%
CBQ Finance Ltd
USD 13.4 million *
Jan-20
Jul-23
Fixed Rate 1.4%
CBQ Finance Ltd
CHF 150 million *
Apr-21
Apr-24
Fixed Rate 0.21%
CBQ Finance Ltd
USD 700 million *
May-21
May-26
Fixed Rate 2%
CBQ Finance Ltd
AUD 100 million *
Jun-21
Jun-23
Fixed Rate 1%
CBQ Finance Ltd
CNH 1 billion *
Jul-21
Jul-23
Fixed Rate 3.22%
CBQ Finance Ltd
HKD 77 million *
Aug-21
Aug-24
LIBOR + 0.48%
CBQ Finance Ltd
NZD 36 million *
Aug-21
Aug-31
LIBOR + 1.38%
CBQ Finance Ltd
NZD 32 million *
Sep-21
Sep-31
LIBOR + 1.36%
Subordinated Notes
Alternatifbank
USD 200 million
Apr-16
Apr-26
Fixed Rate 10.5%
Senior Notes
Alternatifbank
TL 71 million
Aug-21
Aug-23
Fixed Rate 19.3%
Alternatifbank
TL 180 million
Oct-22
Jan-23
Fixed Rate 20.5%
Alternatifbank
TL 200 million
Nov-22
Feb-23
Fixed Rate 24.0%
Alternatifbank
TL 150 million
Nov-22
Feb-23
Fixed Rate 22.0%
* Issued for and Guaranteed by the Bank
# Others include certificate of deposits issued by the bank.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
167
18. DEBT SECURITIES (continued)
Movement in debt securities are analysed as follows:
2022
2021
Balance at 1 January
15,285,788
13,107,134
Additions
1,050,165
8,831,102
Repayments
(5,342,627)
(6,642,025)
Amortization of discount and transaction cost
10,472
12,637
Accrued interest
(6,179)
19,098
Exchange difference
(283,303)
(42,158)
Balance at 31 December
10,714,316
15,285,788
The table below shows the maturity profile of debt securities:
2022
2021
Up to 1 year
3,646,191
4,575,164
Between 1 and 3 years
1,486,679
3,630,309
Over 3 years
5,581,446
7,080,315
Total
10,714,316
15,285,788
19. OTHER BORROWINGS
2022
2021
Bilateral loans
2,227,400
1,434,285
Syndicated loans
8,365,027
6,891,794
Others
5,077,280
7,300,406
Accrued interest
271,820
92,268
Total
15,941,527
15,718,753
Movements in other borrowings are as follows:
2022
2021
Balance at 1 January
15,718,753
14,125,676
Additions
8,151,786
12,308,391
Repayments
(7,374,297)
(9,841,975)
Amortization of discount and transaction cost
22,867
23,484
Accrued interest
179,553
40,864
Exchange difference
(757,135)
(937,687)
Balance at 31 December
15,941,527
15,718,753
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
168
19. OTHER BORROWINGS (continued)
The table below shows the maturity profile of other borrowings:
2022
2021
Up to 1 year
5,785,722
7,177,394
Between 1 and 3 years
5,642,331
2,233,117
Over 3 years
4,513,474
6,308,242
Total
15,941,527
15,718,753
20. OTHER LIABILITIES
2022
2021
Accrued expense payable
181,791
224,637
Other provisions (Note i)
177,417
182,902
Negative fair value of derivatives (Note 37)
826,234
710,720
Unearned income
188,426
198,768
Cash margins
751,555
770,276
Accounts payable
634,388
403,924
Directors’ remuneration and meeting attendance fee
18,500
18,500
Provision for sports and social activities support fund (Note 23)
70,278
57,606
Dividend payable
18,965
19,602
Managers’ cheque and payment order
65,687
166,977
Unclaimed balances
14,384
13,846
Due for trade acceptances
4,305,124
5,375,401
Deferred tax liabilities (note 33)
-
314
Lease liabilities (Note ii)
366,704
384,420
Employees’ benefit liability (Note 31 and Note iii)
85,276
376,965
Income tax payable
16,191
12,118
Others
1,684,394
1,559,908
Net impairment losses on loan commitments and financial guarantees
318,590
174,146
Total
9,723,904
10,651,030
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
169
20. OTHER LIABILITIES (continued)
(i) Other provisions
Provident
fund (a)
Pension
fund (b)
Total
2022
Total
2021
Balance at 1 January
179,727
3,175
182,902
198,147
Provision made during the year (note 31)
13,338
8,117
21,455
22,447
Earnings of the fund
4,855
-
4,855
5,163
Provident fund – staff contribution
4,037
4,509
8,546
9,163
Transferred to state retirement fund authority
-
(12,324)
(12,324)
(13,221)
Payment during the year
(25,210)
(1)
(25,211)
(35,334)
Exchange difference
(2,806)
-
(2,806)
(3,463)
Balance at 31 December
173,941
3,476
177,417
182,902
(a) The provident fund includes the Group’s obligations for end of service benefits to expatriate staff per Qatar labour law
and the employment contracts.
(b) Pension fund contributions in respect of the national staff are paid to the State administered retirement fund at the end
of each month. The Group has no further payment obligations once the contributions have been paid. The contributions
are recognized when they are due.
(ii) Lease liabilities
The table below shows the maturity profile of lease liabilities:
2022
2021
Up to 1 year
137,568
107,158
Above 1 year
229,136
277,262
Total
366,704
384,420
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
170
20. OTHER LIABILITIES (continued)
(iii) Employees’ benefit liability
The Bank has granted performance rights to employees including senior management. Performance rights represent a
contingent right to receive a cash payment by referencing to the value of Bank shares during a specified period of time.
These performance rights do not provide any entitlement to receive Bank shares, voting rights or dividends associated with
them. The fair value at the grant date was estimated using the Black Scholes model, considering the terms and conditions
upon which the performance rights were granted. Performance rights will be settled in cash.
a. The following table summarises information about options at 31 December 2022:
Year
Outstanding Options
2017
4,081,063
2017
29,596,518
2018
2,254,227
2018
11,185,615
2020
100,850,617
2021
53,990,867
b. Movement during the year as follows:
2022
2021
Number of
options
Weighted
average strike
price
Number of
options
Weighted
average strike
price
At 1 January
201,424,907
4.44
157,566,860
3.58
Granted during the year
53,990,867
7.48
109,094,413
5.02
Exercised during the year
(53,456,867)
7.48
(65,236,366)
3.31
At 31 December
201,958,907
5.38
201,424,907
4.44
2022
2021
Max
Min
Max
Min
Expected volatility (%)
31.33%
26.18%
22.40%
15.70%
Dividend yield (%)
10.40%
7.29%
8.39%
2.28%
Risk - free int. rate (%)
4.61%
3.90%
2.19%
1.16%
Vesting period
3 years
3 years
Share price (QAR)
5
6.75
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
171
21. EQUITY
(a) Share capital
The issued, subscribed and paid up share capital of the Bank is QAR 4,047,253,750 (2021: QAR 4,047,253,750) divided into
4,047,253,750 (2021: 4,047,253,750) ordinary shares of QAR 1 each (2021: QAR 1 each).
2022
2021
Authorized number of ordinary shares
4,047,253,750 4,047,253,750
Nominal value of ordinary shares (QAR)
1
1
Issued and paid up capital (in thousands of Qatar Riyals)
4,047,254
4,047,254
At 31 December 2022, the authorized share capital comprised 4,047,254 thousand ordinary share (2021: 4,047,254
thousand).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at shareholders’ Annual/Extra-ordinary General meeting of the Bank.
(b) Legal reserve
The legal reserve of Commercial Bank and Alternatifbank are QAR 9,764 million (2021: QAR 9,764 million) and QAR 105
million (2021: QAR 104 million) respectively.
In accordance with Qatar Central Bank Law No 13 of 2012, 10% of the net profit of the Group for the year is required to be
transferred to legal reserve. Share premium collected from the issuance of new shares and sale of treasury shares is also
transferred to legal reserve. Transfer to legal reserve from net profit is mandatory until the legal reserve equals 100% of the
paid up capital. This reserve is not available for distribution except in circumstances specified in Qatar Commercial
Companies Law No 11 of 2015 and is subject to pre-approval from QCB.
In accordance with the Turkish Commercial code, an entity is required to transfer 5% of net profit until the legal reserve is
equal to 20% of issued and fully paid up share capital. Rate for transfer to legal reserve goes up to 10% of net profit allocated
for distribution excluding the first 5% of the allocated profit. Share premium and proceeds from cancelled shares, if any net
of related expenses are also transferred to legal reserve.
(c) General reserve
As per the Bank’s Articles of Association, the general reserve may only be used in accordance with a resolution from the
General Assembly upon the Board of Directors recommendation and after obtaining Qatar Central Bank approval.
(d) Risk reserve
In accordance with QCB regulations, a risk reserve should be maintained created to cover contingencies on both the public
and private sector financing assets, with a minimum requirement of 2.50% of the total loans and advances of the Group
inside and outside Qatar after the exclusion of the credit impairment losses and interest in suspense. The finance provided
to/or secured by the Ministry of Finance or finance against cash guarantees is excluded from the gross direct finance.
During the year QAR 143 million (2021: QAR 94.2 million) was transferred to the risk reserve account.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
172
21. EQUITY (continued)
(e) Fair value reserve
The fair value reserve arises from the revaluation of the investment securities through FVOCI, cash flow hedges and change
of post acquisition fair value reserve of its associates and a joint arrangement.
Fair value reserve
2022
2021
Balance as at 1 January
392,230
1,000,301
- on equity securities
424,246
(235,569)
- on debt securities
(782,712)
(440,466)
Net amount transferred to statement of income
(39)
(597)
Net movement in effective portion of Cash Flow hedges
(162,708)
59,629
Net change in fair value of investment in associates
(60,437)
8,932
Net movement during the year
(581,650)
(608,071)
Transfer to retained earnings upon disposal of FVOCI equity investments
(177,615)
-
Balance as at 31 December
(367,035)
392,230
(f) Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of
foreign operations.
(g) Other reserves
This includes the Group’s share of profit from investment in associates and a joint arrangement and non-distributable profit
of subsidiaries, net of cash dividend received, as required by QCB regulations as follows:
2022
2021
Balance as at 1 January
684,027
557,273
Share of result of associates and a joint arrangement (note 12)
222,296
129,254
Dividend from associates and a joint arrangement (note 12)
(21,346)
(2,500)
Net movement
200,950
126,754
Balance as at 31 December
884,977
684,027
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
173
21. EQUITY (continued)
(h) Proposed dividend
The Board of Directors has proposed a cash dividend of 25% for the year 2022 (2021: 16% cash dividend). This proposal is
subject to approval at the Annual General Assembly.
(i) Dividends
A cash dividend of 16% for the year 2021 (2020: 10% cash dividend), was approved at the Annual General Assembly held
on 16 March 2022 and distributed to shareholders.
(j) Revaluation reserve
This represents the surplus on revaluation of land and buildings that are used in Group’s operations and is not available for
distribution until the related assets have been disposed off or used.
(k) Instruments eligible for additional capital
In December 2013; the Bank raised regulatory tier 1 capital of QAR 2 billion by issuing unsecured perpetual non-cumulative
unlisted Tier 1 notes. The coupon payments are discretionary and non-cumulative. On the first call date of 30 December
2019, the interest rates on the notes have been agreed at 5.15% (previous rate 6%) and thereafter to be reset at a prevailing
sixth year mid-swap rate plus margin every sixth year which will be at 30 December 2025.
In February 2016; the Bank raised regulatory tier 1 capital of QAR 2 billion by issuing unsecured perpetual non-cumulative
unlisted Tier 1 notes. The coupon payments are discretionary and non-cumulative. On the first call date of 31 December
2021, the interest rates on the notes have been agreed at 4.941% (previous rate 6%) and thereafter to be reset at a
prevailing sixth year mid-swap rate plus margin every sixth year which will be at 29 February 2028.
In March 2021, the Bank raised additional regulatory tier 1 capital of USD 500 million (equivalent to QAR 1.82 billion) by
issuing unsecured perpetual non-cumulative listed Tier 1 notes. The coupon payments are discretionary and non-
cumulative and priced at a fixed rate of 4.5% per annum, payable half yearly until the first reset date and thereafter to be
reset every five years at the relevant reset reference rate plus the margin converted from an annual to a semi-annual rate in
accordance with market conditions. The first reset date will be 3 March 2026.
The Notes are ranked junior to the Bank’s existing unsubordinated obligations including existing subordinated debt and
depositors, pari passu to all current and future subordinated obligations and senior to the ordinary shares issued by the
Bank.
The Notes have no fixed redemption date and the Bank can only redeem the Notes in the limited circumstance as mentioned
in the term sheet i.e. regulatory / tax redemption and other general redemption conditions solely at the Bank’s discretion.
The Bank might be required to write-off the proposed Capital issue, if a “loss absorption” event is triggered and the Bank has
non-discretionary obligation to deliver cash or financial assets. These notes have been classified under equity.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
174
22. OTHER COMPREHENSIVE INCOME
2022
2021
Changes in fair value of investments in debt securities designated at FVOCI (IFRS 9):
Positive change in fair value
326
38,001
Negative change in fair value
(783,038)
(478,467)
Net change in fair value
(782,712)
(440,466)
Net amount transferred to profit or loss*
(39)
(597)
Foreign currency translation differences for foreign operation
(2,135,828)
(610,104)
Share of other comprehensive income of associates and a joint arrangement
(64,370)
(6,309)
Net changes in FV of Cash Flow hedges
(162,708)
59,629
(3,145,657)
(997,847)
Net changes in fair value of equity investments designated at FVOCI (IFRS 9):
Net changes in FV of equity investments – FVOCI
424,246
(235,569)
Share of other comprehensive income of associates and a joint arrangement
3,933
15,241
Revaluation on land and buildings
63,925
(269,158)
Hyperinflation impact
2,290,119
-
Total other comprehensive loss
(363,434)
(1,487,333)
*Net amount transferred to profit or loss includes a positive change in fair value of QAR 48 thousand (2021: QAR 597
thousnad) and a negative change in fair value of QAR 9 thousand (2021: QAR Nil).
23. CONTRIBUTION TO PROVISION FOR SPORTS AND SOCIAL ACTIVITIES SUPPORT FUND
Pursuant to Law No. 13 of 2008, the Bank made an appropriation of QAR 70.3 million (2021: QAR 57.6 million) from retained
earnings for its contribution to the Social and Sports Activities Support Fund of Qatar. This amount represents 2.5% of the
net profit of the Group for the year ended 31 December 2022.
24. INTEREST INCOME
2022
2021
Loans and advances to customers
5,546,214
4,528,471
Debt securities
1,370,765
1,240,153
Amounts deposited with banks
487,229
184,504
Amounts deposited with central banks
68,749
59,320
7,472,957
6,012,448
The amounts reported above include interest income, calculated using the effective interest method, that relate to, at
amortized cost QAR 7,028 million (2021 : QAR 5,536 million) and at fair value QAR 445 million (2021: QAR 476 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
175
25. INTEREST EXPENSE
2022
2021
Customer deposits
2,020,140
1,513,679
Debt securities
301,009
337,807
Other borrowings
596,130
318,648
Interest expense on lease liabilities
2,757
3,127
Amount deposited by central banks and other banks
446,912
137,658
3,366,948
2,310,919
The amounts reported above include interest expense, calculated using the effective interest method, on financial liabilities
at amortized cost.
26. FEE AND COMMISSION INCOME
2022
2021
Loans and advances
267,090
275,014
Credit and debit card fees
615,178
484,935
Indirect credit facilities
157,483
125,946
Banking and other operations
301,595
437,083
1,341,346
1,322,978
27. FEE AND COMMISSION EXPENSE
2022
2021
Credit and debit card fees
443,334
305,511
Brokerage services
84,490
41,750
Others
23,562
47,926
551,386
395,187
28. NET FOREIGN EXCHANGE GAIN
2022
2021
Dealing in foreign currencies & revaluation of spot assets
415,341
309,362
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
176
29. NET (LOSS) / INCOME FROM INVESTMENT SECURITIES
2022
2021
Net gain on disposal of investment securities measured at fair value
50,626
10,745
Net Change in Fair-value of Investment securities
(229,790)
4,553
Dividend income
37,829
9,609
(141,335)
24,907
30. OTHER INCOME
2022
2021
Rental and other income
124,024
137,121
31. STAFF COSTS
2022
2021
Salary and benefits (Note)
559,029
910,700
Health care and medical insurance expenses
13,526
13,264
Staff end of services and pension fund contribution (Note 20 (i))
21,455
22,447
Training and education
1,171
610
595,181
947,021
Note: Salary and benefits include a credit of QR 67 million (2021: a cost of QAR 329 million) with respect to performance
rights due to decline in the market value.
32. OTHER EXPENSES
2022
2021
Marketing and advertisement
32,527
35,306
Professional fees
18,434
23,413
Communication, utilities and insurance
46,986
51,711
Board of Directors’ remuneration
18,500
18,500
Occupancy, IT consumables and maintenance
59,679
47,863
Travel and related costs
1,057
331
Printing and stationery
4,916
4,573
Outsourcing service costs
22,846
24,147
Others
35,773
54,499
240,718
260,343
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
177
33. INCOME TAX EXPENSE
The components of income tax expense for the years ended 31 December 2022 and 2021 are as follows:
2022
2021
Current income tax
77,172
9,615
Deferred tax (benefit) / expense
37,173
(1,010)
114,345
8,605
Profit Before Tax
2,925,453
2,312,859
Less: Profit not Subject to Tax
(2,453,401)
(2,164,207)
Profit Subject to Tax
472,052
148,652
Effective tax rate
24.22%
5.79%
Tax Calculated Based on the Current Tax Rate (Effective Rate)
114,345
8,603
Income not subject to taxation
54,684
611,526
Expenses not deductible for taxation
(85,923)
(455,292)
Adjustments related to prior years
31,239
(156,232)
Income tax expense
114,345
8,605
Movement in Deferred Tax Balances
Recognized in
Deferred tax
31 December 2022
Net balances
at 1 January
Income
Statement
OCI
Exchange
difference
Net
Asset
Liability
Property and Equipment
7,145
(22,751)
-
(1,415)
(17,021)
(17,021)
-
Provisions
56,928
55,382
-
(70,757)
41,553
41,553
-
Derivatives and investment
securities
(33,951)
15,940
(5,129)
31,685
8,545
8,545
-
Unearned Revenue
3,966
3,098
-
(4,782)
2,282
2,282
-
Tax losses carried forward
17,644
3,074
-
(20,717)
1
-
-
Others
1,403
(17,570)
-
65
(16,102)
(16,101)
-
53,135
37,173
(5,129)
(65,921)
19,258
19,258
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
178
33. INCOME TAX EXPENSE (continued)
Recognized in
Deferred tax
31 December 2021
Net balances at
1 January
Income
Statement
OCI
Exchange
difference
Net
Asset
Liability
Property and Equipment
2,594
8,962
-
(4,411)
7,145
7,145
-
Provisions
60,172
36,998
382
(40,624)
56,928
56,928
-
Derivatives and investment
securities
16,022
(74,416)
4,844
19,599
(33,951)
(33,951)
-
Unearned Revenue
5,551
1,457
-
(3,042)
3,966
3,966
-
Tax losses carried forward
26
27,587
-
(9,969)
17,644
17,644
-
Others
2,071
422
-
(1,090)
1,403
1,717
(314)
86,436
1,010
5,226
(39,537)
53,135
53,449
(314)
34. EARNINGS PER SHARE
Earnings per share of the Bank is calculated by dividing profit for the year attributable to the equity holders of the Bank by
the weighted average number of ordinary shares in issue during the year:
2022
2021
Basic and diluted
Profit for the year attributable to the equity holders of the Bank
2,811,108
2,304,253
Less: Dividend on Instrument eligible for additional capital
(283,720)
(263,950)
Profit for EPS calculation
2,527,388
2,040,303
Weighted average number of outstanding shares in thousands (Note 21 (a))
4,047,254
4,047,254
Basic and diluted earnings per share (QAR)
0.62
0.50
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
179
35. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
2022
2021
a) Contingent liabilities
Unutilized credit facilities
3,855,417
2,433,180
Guarantees
17,631,602
18,178,171
Letters of credit
3,034,342
3,044,915
Total
24,521,361
23,656,266
b) Capital commitments
211,837
315,200
Unused facilities
Commitments to extend credit represent contractual commitments to make loans and revolving credits. The total
contractual amounts do not necessarily represent future cash requirements, since commitments may expire without being
drawn upon.
Guarantees and letters of credit
Guarantees and letters of credit make the group liable to make payments on behalf of customers in the event of a specific
event. Guarantees and standby letters of credit carry the same credit risk as loans.
36. CASH AND CASH EQUIVALENTS
2022
2021
Cash and balances with central banks *
3,388,384
12,760,381
Due from banks up to 90 days
10,911,980
6,200,703
14,300,364
18,961,084
*Cash and balances with central banks exclude the mandatory cash reserve.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
180
37. DERIVATIVES
Positive
fair value
Negative
fair value
Notional
amount
within 3
months
3-12
months
1-5 years
More than
5 years
At 31 December 2022:
Derivatives held for
trading:
Interest rate swaps
424,538
301,604
31,101,823 5,204,483
14,174,910 9,306,842
2,415,588
Forward foreign exchange
contracts & others
415,901
407,088 24,669,767 9,781,898 8,566,802 5,864,490
456,577
Derivatives held for fair
value hedges:
Interest rate swaps
94,367
-
946,400
-
-
-
946,400
Derivatives held for cash
flow hedges:
Forward foreign exchange
contracts & others
-
97,512
4,359,346
-
1,359,635
2,471,589
528,122
Interest rate swaps
1,269
20,030
963,084
116,737
690,697
155,650
-
Total
936,075
826,234 62,040,420 15,103,118 24,792,044
17,798,571 4,346,687
At 31 December 2021:
Derivatives held for trading:
Interest rate swaps
538,434
421,783 14,032,962
103,798
484,356
4,385,723 9,059,085
Forward foreign exchange
contracts & others
309,966
173,870 46,444,284 9,675,694 15,017,203 21,322,186
429,201
Derivatives held for fair value
hedges:
Interest rate swaps
-
114,416
1,892,800
-
-
- 1,892,800
Derivatives held for cash flow
hedges:
Forward foreign exchange
contracts & others
1,646
-
9,317,620
-
767,528
7,872,492
677,600
Interest rate swaps
23,827
651
4,081,789
409,404 3,429,407
242,978
-
Total
873,873
710,720 75,769,455 10,188,896 19,698,494 33,823,379 12,058,686
The bank maintains strict control limits on net open derivative positions, i.e. the difference between purchase and sale
contracts, by both amount and term. At any one time the amount subject to credit risk is limited to the current fair value of
instruments that are favourable to the bank (i.e. assets) which in relation to derivatives is only a small fraction of the contract
or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of
the overall lending limits with customers, together with potential exposures from market movements. Collateral or other
security is not usually obtained for credit risk exposures on these instruments, except where the bank requires margin
deposits from counter-parties.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
ANNUAL REPORT 2022
181
37. DERIVATIVES (continued)
At 31 December 2022, the Group held the following derivatives as hedging instruments:
Hedging instrument
Cash Flow Hedges:
Hedged item
Description
Currency
Notional in
currency
Average
Rate
Interest Rate Swaps
Borrowings
Floating for fixed
TRY
2,350,000,000
22.5%
TRY to USD
USD
6,685,100
5.0%
TRY
125,000,000
23.0%
Bond Issuance
Floating for fixed
USD
146,000,000
2.8%
Cross Currency Swaps
Bond Issuance
CHF to USD
USD
513,682,109
2.7%
CHF
485,000,000
1.1%
CNH to USD
USD
179,033,979
1.1%
CNH
1,171,000,000
3.3%
HKD to USD
USD
95,053,138
1.9%
HKD
737,000,000
2.4%
JPY to USD
USD
33,957,809
1.2%
JPY
3,500,000,000
0.6%
AUD to USD
USD
77,510,000
1.1%
AUD
100,000,000
1.0%
NZD to USD
USD
48,043,480
1.1%
NZD
68,000,000
4.5%
Loans
JPY to USD
USD
155,074,752
5.9%
JPY
16,700,000,000
0.3%
Hedging instrument
Fair value Hedges:
Hedged item
Description
Currency
Notional in
currency
Average
Rate
Interest Rate Swaps
Govt Bonds
Fixed for floating
USD
260,000,000
2.79%
38. FUND MANAGEMENT
As at the end of the reporting date, the Group holds QAR 452 million (2021: QAR 706 million) worth of international
investment securities on behalf of its customers. Out of this amount, investment securities with a value of QAR 452 million
(2021: QAR 644 million) are held with an international custody and settlement house. The remaining investment securities
are held with the financial institutions through whom the securities were purchased. These financial institutions are industry
leaders in their respective fields. The Group has established maximum limits for such holding with each financial institution
according to its risk management policy.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2022
QAR ‘000s
cbq.qa
182
39. RELATED PARTIES
Related parties are considered to be related if one party has the ability to control the other party or exercise significant
influence over the other party in making financial or operational decisions. Related parties of the Group include board
members, close family members of the Board members, entities which are controlled, jointly controlled or significantly
influenced by the Board members, subsidiaries, associates, joint ventures and key management personnel of the Group.
Key management personnel comprise those executive committee members “EXCO” of the Group who are involved in the
strategic planning, decision making and controlling the activities of the Group, directly or indirectly. The terms of these
transactions are approved by the Group’s management and are made on terms agreed by the Board of Directors or
management.
A significant portion of the loans, advances and financing activities’ balance at 31 December 2022 and 31 December 2021
with the members of the Board and the companies in which they have significant influence are secured against tangible
collateral or personal guarantees. Moreover, the loans, advances and financing activities are performing satisfactorily
honoring all obligations.
2022
2021
Board members of the bank
- Loans, advances and financing activities (a)
1,523,864
1,639,417
- Deposits
789,391
1,620,662
- Contingent liabilities and other commitments
13,809
2,653
- Interest and fee income
122,396
56,413
- Interest paid on deposits accounts of board members
29,325
9,925
- Remuneration
18,500
18,500
Associates and joint arrangement companies
Due from banks
145,600
145,600
Due to banks
51,980
22,087
Deposits
5,995
6,660
Contingent liabilities
10,073
13,849
- Interest paid to associates
1,297
97
Key management of the bank
- Remuneration and other benefits*
47,115
41,698
- Loans and advances
7,522
4,747
* In addition to the above remuneration and other benefits, employees of the bank including senior management has been
granted performance rights. At 31 December 2022, cost for performance rights for senior management was a credit of
QAR 43.3 million (2021: charge of QAR 170.7 million).
ANNUAL REPORT 2022
183
Financial Statement of the Parent
(a) Statement of Financial Position – Parent
QAR ‘000s
As at 31 December
2022
2021
ASSETS
Cash and balances with central banks
6,681,125
15,901,765
Due from banks
20,570,160
10,921,498
Loans and advances to customers
91,144,072
90,021,904
Investment securities
27,655,887
24,369,757
Investment in associates and a joint arrangement and subsidiaries
5,858,557
4,109,786
Property and equipment
2,536,627
2,359,247
Other assets
5,655,181
5,423,227
TOTAL ASSETS
160,101,609
153,107,184
LIABILITIES
Due to banks
23,950,009
17,684,588
Customer deposits
77,632,361
75,569,974
Debt securities
9,871,317
14,330,996
Other borrowings
13,439,626
12,373,748
Other liabilities
8,876,581
9,627,419
TOTAL LIABILITIES
133,769,894
129,586,725
EQUITY
Share capital
4,047,254
4,047,254
Legal reserve
9,763,429
9,763,429
General reserve
26,500
26,500
Risk reserve
2,340,332
2,197,217
Fair value reserve
(371,263)
417,617
Foreign currency translation reserve
(1,481,504)
(3,136,032)
Other reserves
834,978
634,027
Revaluation reserve
995,636
995,636
Retained earnings
4,356,353
2,754,811
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
20,511,715
17,700,459
Instruments eligible for additional capital
5,820,000
5,820,000
TOTAL EQUITY
26,331,715
23,520,459
TOTAL LIABILITIES AND EQUITY
160,101,609
153,107,184
cbq.qa
184
Financial Statement of the Parent continued
(b) Income Statement – Parent
QAR ‘000s
For the year ended 31 December
2022
2021
Interest income
5,857,991
4,698,985
Interest expense
(2,186,287)
(1,236,765)
Net interest income
3,671,704
3,462,220
Fee and commission income
1,131,956
1,177,422
Fee and commission expense
(466,892)
(353,292)
Net fee and commission income
665,064
824,130
Net foreign exchange gain
371,060
304,928
Net income from investment securities
(149,015)
15,814
Other operating income
79,258
78,808
Net operating income
4,638,071
4,685,900
Staff costs
(358,950)
(736,870)
Depreciation
(121,877)
(115,568)
Amortization and impairment of intangible assets
(46,268)
(46,268)
Net impairment losses on investment securities
(11,480)
(2,335)
Net impairment losses on loans and advances to customers
(990,317)
(1,009,438)
Net impairment losses on other financial assets
(153,478)
1,329
Impairment on Investment in an Associate
-
(291,000)
Other provisions
(71,210)
(21,697)
Other expenses
(337,238)
(299,846)
Profit for the year
2,547,253
2,164,207
The Commercial Bank (P.S.Q.C.)
P.O.Box 3232 Doha, Qatar
Phone: +974 4449 0000
www.cbq.qa