Access a world
of sustainability
ANNUAL REPORT 2023
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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In a world that is geared towards
sustainability, supporting the global
movement has become every organization’s
call to action. As one of the pioneering
banks in Qatar, we hold a unique position to
ignite positive change across the industry.
So, we weaved sustainability into the very
fabric of our strategy and contributed
to maneuvering a nation to commit to
safeguarding our planet.
The following 5Cs have been our guiding
principles and have enabled us to maximize
our impact across different business fields:
• Corporate Earnings Quality
• Client Experience
• Compliance
• Culture
• Creativity & Innovation
Access a world of
sustainability
Where sustainability aligns
with digital brilliance
We have harnessed the power of today’s
digital age as a driving force for both
empowerment and sustainability.
Commercial Bank has successfully
integrated these technologies in its
strategy and has increased accessibility for
customers to advanced yet eco-friendly
financial solutions such as cashierless
checkouts, green loans, paperless
transactions, and many more.
Our dedication has not only set the
standards for financial solutions but has
also unlocked new horizons in sustainability.
The Bank’s collective efforts are poised to
reshape the banking industry in Qatar into
one that is future-proof and empowering.
ANNUAL REPORT 2023
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
Sustainability
67
Independent Auditor’s Report
74
Consolidated Statement of Financial Position
79
Consolidated Statement of Income
80
Consolidated Statement of Comprehensive Income
81
Consolidated Statement of Changes in Equity
82
Consolidated Statement of Cash Flows
86
Notes to the Consolidated Financial Statements
88
Supplementary Information
190
Content
Towards
a sustainable future
Through cutting-edge digital solutions,
we enhance customer experiences,
making transactions efficient and
eco-friendly, paving the way towards a
sustainable tomorrow.
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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 31 branches, 305
ATMs, 12 instant cheque book printing machines, 16
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.
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 164.4 billion as at 31 December 2023 and
a capital adequacy ratio of 14.9% 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 2023
9
Subsidiaries
Alternatif Bank: A fully owned subsidiary in
Turkey providing its customers in the corporate,
commercial, and retail banking segments with
high value products, services, and solutions.
Alternatif Bank has a wide distribution of
branches in Turkey and works closely with its
counterparts in Commercial Bank to implement
best international practice and continue to realise
synergies.
Commercial Bank Financial Services LLC:
A fully owned subsidiary that provides direct
access to the Qatar Exchange, online trading, and
brokerage services.
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 Innovation Services LLC: A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority providing the Bank with
operations management services.
CB Asset Management LLC: A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority established to provide
asset management services.
CB Real Estate Properties LLC: A fully owned
subsidiary incorporated in Qatar under the Qatar
Financial Centre Authority providing the Bank with
advisory services in relation to property.
CB Leasing Company LLC: A fully owned subsidiary
incorporated in Qatar under the Qatar Financial
Centre Authority that leases and subleases
properties in Qatar.
Orient 1 Limited: A fully owned subsidiary
incorporated in Bermuda (under liquidation).
Associates and a Joint Venture
National Bank of Oman (S.A.O.G.): Established
in 1973 and operates via five main segments: retail
banking, corporate banking, investment banking,
treasury and international banking, and Islamic
banking. National Bank of Oman’s shares are listed
on the Muscat Stock Exchange (MSX).
United Arab Bank (P.J.S.C.): Established in 1975
and provides corporate banking, retail banking,
trade finance, SME banking and treasury services.
United Arab Bank is headquartered in Sharjah and
its shares are listed on the Abu Dhabi Securities
Exchange (ADX).
Massoun Insurance Services LLC: A joint
arrangement entity that provides tailored corporate
and personal insurance products to the Bank’s
customers.
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ANNUAL REPORT 2023
11
Our voyages
Business at a Glance
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.
2023 Powered by Commercial Bank’s payment acceptance
solution, Lulu MEA opened Qatar’s first and the region’s
second check-out free store - the Lulu Express at
Hamad International Airport Metro Station.
Innovating with impact
By innovating for impact, we enhance the
overall customer experience, providing
seamless and environmentally conscious
financial services that resonate with
present needs and future aspirations.
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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 3,010 million
QAR 0.71
QAR 91.5 bn
QAR 76.5 bn
QAR 164.4 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.
3,010
NET PROFIT (QAR MILLION)
Forward Looking Statements
ANNUAL REPORT 2023
15
Net Operating Income
Net Interest Income
70%
Net Fee Income
15%
Other Income
1%
Foreign Exchange
Income
10%
Investment &
Dividend Income
4%
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Customer Deposits
47%
Other Borrowed Funds
21%
Due to Banks and
Financial Institutions
11%
Shareholders’ Equity
15%
Other Liabilities
6%
Funding Mix
ANNUAL REPORT 2023
17
Legal Reserve
41%
Share Capital
17%
Additional Tier 1 Note
24%
Risk Reserve
9%
Retained Earnings
18%
Other Reserves
-9%
Shareholders’ Equity
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Services*
27%
Real Estate
21%
Commercial
17%
Government
15%
Industry
7%
Personal
9%
Contracting
3%
Other
1%
*includes Non-banking financial institutions
Loans & Advances
ANNUAL REPORT 2023
19
Loans & Advances
56%
Investment Securities
19%
Other Assets
5%
Liquid Assets
18%
Investment in Associates
2%
Total Assets
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In QAR million, except per share amounts
and as stated otherwise
2023
2022
2021
2020
2019
Net interest income
3,867
3,963
3,702
3,100
2,963
Net operating income
5,489
5,294
5,101
4,237
4,347
Net profit
3,010
2,811
2,304
1,301
2,021
Total assets
164,376
168,902
165,047
153,606
147,536
Lending to customers
91,490
98,016
98,003
96,698
88,009
Basic/diluted earnings per share in QAR
0.71
0.66
0.50
0.27
0.44
Dividends declared per ordinary share
including bonus shares in QAR
0.25
0.25
0.16
0.10
0.20
Closing market price per ordinary share in
QAR (at year end)
6.20
5.00
6.75
4.40
4.70
Book value per ordinary share in QAR
6.03
5.97
5.61
5.48
5.38
Long-term debt (at year end)
34,166
27,786
31,953
27,233
21,568
Shareholders’ equity (at year end)
24,406
24,171
22,708
22,170
21,756
Return on average shareholders’ equity
12.4%
12.0%
10.3%
5.9%
9.7%
Return on average assets
1.8%
1.7%
1.4%
0.9%
1.4%
Capital adequacy ratio
14.9%
17.3%
18.1%
17.8%
16.4%
Full-time employees (at year end)
2,301
2,233
2,308
2,304
2,320
Financial Highlights
ANNUAL REPORT 2023
21
• Net profit of QAR 3,010.2 million, up by 7.1%.
• Operating income of QAR 5,489.5 million, up by
3.7%.
• Net interest margin (NIM) is improved to 2.8%, up
by 10 basis points.
• Return on average assets (ROAA) has improved
to 1.8% as compared to 1.7% in 2022.
• Total assets of QAR 164.4 billion, down by 2.7%.
• Customer loans and advances of QR 91.5 billion,
down by 6.7% from December 2022.
• Customer deposits of QR 76.5 billion, down by
8.0% from December 2022.
• “The Most Innovative Bank” award in the Middle
East by World Finance in 2023.
• “The Fastest Growing Brokerage House” award in
Qatar by International Finance in 2023.
7.1%
3.7%
NET PROFIT OF
QAR 3,010.2 MILLION,
UP BY 7.1%
OPERATING INCOME OF
QAR 5,489.5 MILLION,
UP BY 3.7%
Key Highlights
Sustainability
with every transaction
Through user-friendly interfaces, we
redefine banking and empower customers
to actively participate in sustainable choices.
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Chairman’s Message
I am pleased to present to you Commercial Bank’s Annual
Report for the year ended on 31 December 2023.
The global economy proved more resilient than expected
in 2023, with performance beating expectations in the US
and the Euro area. This was despite the effects of monetary
policy tightening by major central banks throughout most
of the year that was necessary to reduce inflation. While
the likelihood of a hard economic landing has receded, the
global recovery from the COVID-19 pandemic and Russia’s
invasion of Ukraine remains slow and uneven, with economic
activity still below pre-pandemic levels in emerging markets.
The IMF projects that global growth will slow in 2024 versus
2023, and forecasts for global growth over the medium term
are at their lowest in decades.
Despite the difficulties facing the global economy, the Qatari
economy grew by 2.4% in 2023. The North Field Expansion
Project has boosted the positive outlook for the local
economy and a rise in energy prices above the conservative
forecast price in the State’s budget has led to a surplus.
The Government is prudently reducing levels of public
debt and increasing the State’s financial reserves, which is
proving effective in strengthening the local economy. Qatar’s
substantial reserves and a low fiscal breakeven oil price are
its fundamental economic strengths, and this is reflected in
strong sovereign ratings of Aa3, AA and AA- from Moody’s,
S&P and Fitch respectively.
Abdulla Bin Ali Bin Jabor Al Thani
Chairman
ANNUAL REPORT 2023
25
The Government continues to develop Qatar’s business
environment through a wide range of policy measures. In
2023, the Qatar Central Bank launched the 3rd Financial
Sector Strategy to support the economy and financial
institutions, promote the financial sector through innovation
and efficiency, provide appropriate solutions which
safeguard stakeholders’ interests, and help promote growth.
Commercial Bank will continue to provide our unwavering
support in the development process of the financial sector
and broader national development objectives in line with the
Qatar National Vision 2030.
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 its successful development path and
growth trajectory. 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 Foreign
Affairs 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 second 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 2023, and the Board
of Directors has recommended, for approval at the Annual
General Assembly on 1 April 2024, 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 2023
27
1. Sheikh Abdulla bin Ali bin Jabor Al Thani
Chairman
2. Mr. Hussain Ibrahim Alfardan
Vice Chairman
(Representing Alfardan Investment Company)
3. Mr. Omar Hussain Alfardan
Managing Director
(Representing Al Gassar Capital)
4. HE Mr. Abdul Rahman Bin Hamad Al Attiyah
Member
5. Sheikh Jabor Bin Abdulla Bin Ali Al Thani
Member
(Representing Vista Trading)
6. HE. Mr. Bader Omar Al Dafa
Member
7. Mr. Ibrahim Jassim Al-Othman
Member
8. Mr. Salem Khalaf Al Mannai
Member
(Representing Qatar Insurance Company )
9. Mr. Mohd Ismail Mandani Al Emadi
Member
10. Mr. Tariq Ahmad Al Malki Al Jehani
Member
11. Mr. Mohammed Yaser Al Mosallam
Member
4
1
5
2
6
7
3
8
9
10
11
Digital sustainable
horizons
By offering a seamless and intuitive digital
experience, we meet evolving customer
needs while reducing our ecological
footprint.
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Vice Chairman’s Message
In 2023, Commercial Bank completed the second year
of our 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 2023, with the Group achieving
a net profit of QAR 3.01 billion for the period, up by 7.1%
compared to 2022, primarily driven by improved operating
income, higher recoveries and improved performance of our
associates and subsidiary. This is the highest ever net profit
achieved by Commercial Bank, beating the previous high
water mark in 2022.
Our business shows good underlying growth, with operating
income of QAR 5.49 billion, up by 3.7%. Net interest income
for the year 2023 saw a slight decrease of 2.4%, to reach
QAR 3.87 billion, down from QAR 3.96 billion in 2022. Loans
and advances reduced by 6.7% year on year primarily due to
a reduction in Alternatif Bank loans due to the depreciation
of the Turkish lira and repayments of temporary government
overdrafts in Qatar. Although, net interest income decreased
by 2.4%, the Bank improved its net interest margin to 2.8%
for the year, up by 10 basis points as compared to prior year
2022. Our focus remains on reshaping the profile of the
lending book, with continued diversification of risk across a
Mr. Hussain Ibrahim Alfardan
Vice Chairman
ANNUAL REPORT 2023
31
range of sectors. Overall fees and other income increased
by 21.9% to QAR 1.62 billion, compared to QAR 1.33 billion
in 2022. This rise was mainly driven by higher investment
income.
Customer deposits declined by 8.0% to QAR 76.5 billion,
in line with the reduction in loans and advances. In addition,
low-cost deposits fell by 15.3%, reaching QAR 25.7 billion,
compared to QAR 30.3 billion in the previous year.
The Group’s cost-to-income ratio increased to 26.2%
from 21.5% in 2022. This rise was mainly due to elevated
operating expenses incurred at Alternatif Bank. The
Domestic Bank’s cost-to-income ratio remained low at
22.2%.
Another important factor driving our increase in net profit
was the contribution from our international associates,
who continued to deliver improving performance with our
profit from share of associates growing by 32.3% in 2023,
amounting to QAR 294.2 million, up from QAR 222.3 million
in 2022. Our Turkish subsidiary Alternatif Bank witnessed an
upturn in net profit, achieving QAR 83.6 million in contrast
to QAR 31.5 million net profit in the previous year. This
improvement can be attributed to an improved FX and
trading income. However, the Group remains in adherence
to the International Accounting Standards (IAS) 29, which
requires the application of hyperinflationary accounting for
Alternatif Bank. As a result, a non-cash “net monetary loss”
of QAR 335.0 million was recorded in the Group’s income
statement for the period as compared to QAR 189.4 million
in the corresponding period in 2022.
The Group’s capital ratios remain above the minimum
capital requirements. The gross cost of risk increased by
1 basis point to 144 bps as compared to 143 bps, and the
net cost of risk decreased by 16 basis points to 105 basis
points as compared to 121 basis points in 2022, due to
strong recoveries during the year. We continue to provision
prudently and take a cautious approach.
Finally, I would like to close by thanking our customers,
partners, employees and shareholders for their continued
commitment and support.
Mr. Hussain Ibrahim Alfardan
Vice Chairman
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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 2023 marked
the second year of our new five year strategic plan (2022 –
2026).
Corporate earnings quality reflects the strong execution
of our strategic plan, with the Bank crossing the landmark
net profit figure QAR 3 billion for the first time, and a third
consecutive year of record profit. This was achieved in a
scenario of muted loan growth due to elevated interest
rates. Our strategic plan is positioning Commercial Bank
for sustainable growth in the longer-term by focusing on
credit quality, a strong risk culture, building new revenue
streams and non-lending based fee income, together with
an emphasis on low cost deposits due to the Bank’s market
leading Transaction Banking initiatives and digital products.
Commercial Bank made good progress in advancing our
ESG performance in 2023. In line with the Qatar National
Vision 2030, the Bank launched its inaugural Sustainable
Finance Framework, which will further our commitment to
support projects that enable the transition to a low carbon
and climate resilient economy, as well as those with a positive
societal impact. We also launched a number of new initiatives
to reduce the carbon footprint associated with our own
operations.
Joseph Abraham
Group Chief Executive Officer
ANNUAL REPORT 2023
33
In 2023 we continued to invest significantly in our
technology, branches, corporate premises and people. Our
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.
Commercial Bank received several notable awards in 2023
in recognition our achievements, including: “The Most
Innovative Bank Award in the Middle East” by World Finance;
“The Most Innovative Mobile Banking App in the World” from
Global Finance; and “The Best Digital Bank for Trade Finance
Services award in Qatar.” These awards particularly reflect
our excellence in digital innovation and are testament to the
hard work and dedication of our staff over several years.
In 2023 despite the volatility in the Turkish economy, our
subsidiary Alternatif Bank showed an improved performance
and this was supported by our associate banks, National
Bank of Oman and United Arab Bank, who continued to
deliver improving performances.
With the 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, we look
forward to continuing to grow our business sustainably in
2024.
Joseph Abraham
Group Chief Executive Officer
Sustainable Responsibility
Our commitment to responsible banking
extends to Corporate Social Responsibility
in the digital sphere.
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36
Management Review of Operations
Financial Results
In 2023, Commercial Bank delivered a net profit of QAR
3,010 million, an increase of 7.1% compared with QAR 2,811
million achieved in 2022.
Loans and advances to customers decreased to QAR 91.5
billion at 31 December 2023. The overall loan book was
impacted by Alternatif Bank, whose loans decreased due
to the Turkish lira depreciation and at domestic level, the
decrease was due to government repayments of temporary
overdrafts.
Our deposits decreased by 8.0%, to QAR 76.5 billion at 31
December 2023 compared with QAR 83.2 billion in 2022,
mirroring a 6.7% reduction in net loans and advances to
customers. This decline is largely due to effects of rising
interest rates. In addition, low-cost deposits fell by 15.3%,
reaching QAR 25.7 billion.
Investment securities increased by 3.1% to QAR 30.8 billion
at 31 December 2023 compared with QAR 29.8 billion in
2022.
Mohamed Farhan
Acting Chief Financial Officer
Financial Results (QAR million)
2023
2022
Net Interest Income
3,867
3,963
Non-Interest Income
1,622
1,331
Net Operating Income
5,489
5,294
Operating Expenses
(1,441)
(1,138)
Impairment on Loans & Advances
(991)
(988)
Reversal/(Impairment) on Other Financial
Assets & Other Provision
74
(276)
Share of results of Associates
294
222
Net monetary losses due to hyperinflation (335)
(189)
Income Tax Expense
(80)
(114)
Net Profit for the Year
3,010
2,811
Operating Expenses (QAR million)
2023
2022
Staff Costs
771
595
General and Administrative Expenses
366
241
Depreciation and Amortization
304
302
Total Operating Expenses
1,441
1,138
ANNUAL REPORT 2023
37
Net Operating Income
Commercial Bank’s net operating income reached QAR
5,489 million for the year ended 31 December 2023, an
increase of 3.7% compared with QAR 5,294 million achieved
in 2022.
Net interest income for the group decreased by 2.4% to
QAR 3,867 million for the year ended 31 December 2023
compared with QAR 3,963 million in 2022. Net interest
margin improved to 2.8% for the year ended 31 December
2023 compared with 2.7% achieved in the same period in
2022.
Non-interest income increased by 21.9% to QAR 1,622
million for the year ended 31 December 2023 compared
with QAR 1,331 million in 2022 due to the higher investment
income.
Operating Expenses
Total operating expenses increased at a group level by
26.6% to QAR 1,441 million for the year ended 31 December
2023 compared with QAR 1,138 million in 2022. The increase
was primarily mainly due to inflation related expenses as well
as one-off expenses in Turkey and Bank’s continued digital
investments.
Net Provisions for Impairment Losses
The Group’s net provisions for loans and NPLs increased by
0.3% to QAR 991 million for the year ended 31 December
2023, compared to QAR 988 million in 2022. The non-
performing loan ratio increased to 5.9% in December 2023
compared with 4.9% in 2022, whilst loan coverage ratio
decreased to 105.1% at 31 December 2023 from 105.4% in
2022.
The bank sets aside a risk reserve against its lending as
part of shareholders’ equity. At 31 December 2023, the risk
reserve was QAR 2,275 million.
Total Assets and Funding
Commercial Bank balance sheet decreased by 2.7% in 2023,
with total assets at QAR 164.4 billion compared with QAR
168.9 billion in 2022.
Balance sheet decrease was driven mainly by decrease
in loans and advances to customers by QAR 6.5 billion,
decrease in due from banks by QAR 0.3 billion and this was
offset by increase in investment securities by QAR 0.9 billion.
Customers’ deposits decreased by 8.0% to QAR 76.5 billion
at 31 December 2023, compared with QAR 83.2 billion in
2022. Low-cost deposits decreased by 15.3% in 2023.
Capital
Commercial Bank’s capital position remains strong, the
capital adequacy ratio stood at 14.9% as at 31 December
2023 compared with 17.3% at the end of 2022. The capital
adequacy ratio is above the Qatar Central Bank’s required
minimum level of 14.1%.
cbq.qa
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Management Review of Operations continued
Subsidiaries
Alternatif Bank
Alternatif Bank reported a net profit of TL 467 million
compared to a net profit of TL 123 million for the previous
year. However, the results for 2023 are impacted by the
hyperinflation accounting by TL 1,468 million.
As of 31 December 2023, Alternatif Bank’s total assets stood
at TL 70.8 billion and lending at TL 34.8 billion.
Alternatif Bank provides its customers in the corporate,
commercial and retail banking segments with high
value products, services and solutions. Alternatif Bank
has 24 branches widely distributed around Turkey. In
2023, 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 2023, CBFS delivered a net profit of QAR 53
million.
Orient 1 Limited
A fully owned subsidiary, that owns and manages an
exclusive Diners Club franchise in Turkey. The subsidiary is
currently under liquidation.
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 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.
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 58
million, compared with OMR 48 million in 2022. Operating
income increased to OMR 146 million, compared with OMR
138 million in 2022.
During 2023, NBO’s loans and advances increased by 4.2%
to OMR 3.5 billion and customer deposits up 17.2% to OMR
3.6 billion.
United Arab Bank (P.J.S.C.)
United Arab Bank (UAB) continues on improving its
operations and achieved a net profit of AED 255.3 million
in 2023 compared with a net profit of AED 154.7 million in
2022. We continue to work closely with UAB management
to ensure that UAB achieves improved results through
implementation of 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 2023
39
Wholesale Banking
Commercial Bank’s Wholesale Banking department offers
a comprehensive range of financial products and leading,
state-of-the-art solutions and services to local businesses,
government, and public sector entities and multinationals
with a presence in Qatar. Along with its subsidiaries and
associated entities (Alternatif Bank in Turkey, UAB in the UAE
and NBO in Oman) the Bank works actively to implement a
coordinated financial institutions strategy across the Group,
utilise credit, trade finance and other cross-border business
opportunities throughout the GCC and the wider region, in
alignment with their shared business objectives. Wholesale
Banking serves all corporate customer segments providing
innovative solutions and services.
Wholesale Banking’s dedicated units provide tailoured
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, tailored financial solutions, and the application of
innovative technologies. Its wide ranging, market leading
services include corporate finance, transaction banking,
cash management, trade, advisory services, treasury, and
investment banking, across industries.
Business performance
In 2023, Wholesale Banking continued to be the
significant contributor to the Bank’s revenues. While the
assets decreased due to repayment of government
debt and overall market dynamics during the year, 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 in line with the market.
• Continued focus on maintaining quality assets of the
right customers, with the right risk profile.
• Managing the balance sheet with selective new
assets and proactively de-risking assets in alignment
with our robust risk framework for business growth
and sustainability.
• Maintaining focus on government and public sector
assets.
• Diversifying revenue streams
• Increasing the momentum on Transaction Banking
growth with a greater lead over competition with
continued innovation.
• Acquiring new mandates of government and public
sector entities for tailoured solutions and services.
Raju Buddhiraju
EGM, Wholesale Banking
cbq.qa
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Government and Public Sector focus
Wholesale Banking successfully acquired the comprehensive
banking mandate of a prominent state-owned fuel
distribution and marketing services company in listed on
the Qatar Stock Exchange, and its subsidiaries. The holistic
solution encompasses payments, collection services and the
entire gamut of liability management services customised
for the entity. This milestone marks a major achievement
in CB’s expansion and dominance in the financial services
sector through end-to-end world-class solutions for its
strategic clients.
Diversifying income streams and Cross Sell
Fee-based income was above 20% of Wholesale Banking’s
total operating income, reflecting the continued strategic
focus to diversify revenue streams and increase the
contribution of fee-based income from transaction banking
and non-lending assets.
The Wholesale Banking and Retail Banking teams enhanced
the total relationship value for each customer through
deeper entrenchment of products and services, including
wealth management solutions, cards, accounts, vehicle loans
etc. These were successfully delivered through dedicated
teams specialised in providing tailoured retail solutions to
Wholesale Banking customer relationships.
Working with Alliance banks
Wholesale Banking supports Turkish companies as well as
Qatari business 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’s comprehensive range of
banking solutions to corporate clients operating in Qatar,
covers all requirements of different segments such as large
corporates, mid-market corporates, contractors, ultra-high
net worth individuals, government, and public sector. From
arranging large financing in the form of medium to long-
term loans, working capital facilities and project specific
financing across different industries, Domestic Banking
provides customized specialized solutions to corporates.
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.
Commercial Bank is actively committed to empowering
entrepreneurs and supporting the needs of SMEs through
our dedicated Enterprise Banking team within Wholesale
Banking. With a significant active SME customer based
growing at a high rate of acquisition year on year, Wholesale
Banking continues to have a leading share of the transaction
volumes in the local market. The unit stays focused on
engaging with SMEs across sectors, servicing them through
innovative digital channels, while maintaining dedicated
service centres across the country.
In 2023 Domestic Corporate Banking continued to enhance
its best client experience and service quality through
innovative banking solutions. It focused on organic growth
of operations and state-of-the-art technologies in its
concerted efforts to reduce paper- based transactions and
Management Review of Operations continued
Commercial Bank selected by Edaa to be Qatar’s first payment bank for
cash dividends distribution
ANNUAL REPORT 2023
41
turnaround time and provide world-class digital solutions to
its corporate customers.
Transaction Banking
Wholesale Banking continues to win accolades for its
innovation, digitization and enhancing client experience.
2023, 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 CB
Pay 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 - Global Finance and Euro Money. The Bank saw
higher utilization of its channels- over 90% of payments,
99% of salaries and 96% 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 Bank enabled API-based solutions
for payments and connectivity between the Bank and
its customers which enhanced the seamless payment
experience. Qpost and Kahramaa customers can now pay
their bills and update their accounts in real time.
In the post-COVID era, there has been a shift in customer
preferences towards the receipt of credits through direct
transfers. This change emphasizes the crucial role of
efficient credit identification and reconciliation processes
for businesses. Recognizing this shift, we introduced a
tailored solution designed to streamline and enhance the
credit reconciliation experience for our customers. Through
our system, customers receive real-time alerts containing
comprehensive details about the credits deposited into their
accounts. By combining timely alerts and system-generated
files for ERP upload, our solution aims to optimize the entire
credit reconciliation process.
The Transaction Banking team continued to win multiple
prestigious awards in 2023 from qualified regional and
global research organizations that assess the nominated
institutions, talent, leadership skills, industry net worth and
capabilities:
• Leader of Qatar in Digital Solutions and Corporate
Banking from Euromoney publication.
• Best Bank for Corporate Banking in Qatar (2022) from
Euromoney Awards for excellence.
• Best Digital Bank for Trade Finance Services in Qatar 2023
from The Global Finance.
• Best Corporate Mobile Banking App in Qatar 2023 from
The Global Finance.
Some of the other significant initiatives and
achievements are as follows:
• Growth in trade outstanding from QAR 15.8 Bn as of
31 December 2022 to QAR 17 Bn as of 31 December
2023, with a total value of QAR 29 Bn in trade finance
transactions put through for 2023.
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• Upgrade of front and back-end systems i.e. Corporate
Trade Portal (CTP) and Trade Innovation (TI) in line with
latest technology standards.
• Customized B2B solutions rolled out for large public
sector conglomerates engaged in Transportation,
Aviation, Petrochemicals and Exports.
• 14.3% of the Qatar’s Letter of Credit (LC) based exports
by volume and 18.77% by value, handled in 2023.
• Direct Debit Solution for seamless bill payments for
customers unveiled along with Ooredoo.
• Postdated Cheque Management solution designed and
implemented for the benefit of the real estate sector,
providing control of data, remote submission of cheques
and custody.
• Bulk credit and reconciliation solution (an in-house
invoice reconciliation solution) rolled out for the customer
with API connectivity that updates the customer’s ERP for
auto reconciliation of transactions.
• Corporate Mobile App enriched with new features to
conduct all payments and inquiries of bank accounts.
• Integrated General Tax Authority payment through CIB
implemented for corporates to provide real-time enquiry
and payment.
• Exclusive solutions designed for investors under Qatar
Free Zone Authority.
• Swift GPI implemented for more new corporates through
CIB and CBQ Mobile App for online, tracking customer
transactions on real-time basis.
• Multiple structured trade solutions rolled out 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 2023, 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 2023. 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 IMF and IIF meetings in Marrakesh
ANNUAL REPORT 2023
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.
2024 priorities
Moving forward, our strategic priorities in 2024 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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Commercial Bank 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.
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 Retail Bank in Qatar’.
As a business group, we are fully aligned and committed
to the Bank’s strategy underpinned by the 5C’s: Corporate
Earnings Quality, Client Experience, Creativity & Innovation,
and Culture and Compliance.
Our continuous dedication to creativity and innovation
has earned us a multitude of awards in the year 2023,
underscoring our excellence in the digital banking sphere
and reinforcing the ease and convenience we provide
for our customers to bank with us. A few highlights of our
accomplishments encompass:
• S&P affirms Commercial Bank’s rating to A-.
• “Top Innovation in Mobile Banking Award” in the World
2023” from Global Finance.
• “The Best Customer Service Initiative” in Qatar from
International Finance.
• “Best Mobile Banking Application” in Qatar from
International Finance.
• “Best Trade Finance Provider” in Qatar from Global
Finance.
• “Fastest Growing Cards Issuer in Qatar” from
Mastercard.
• “Highest Spend Card in the MENA East” from
Mastercard.
• “Best Consumer Mobile Banking App in Qatar” from
Global Finance.
• “Best Corporate Mobile Banking App in the Middle
East” from Global Finance.
• “Best Digital Bank for Trade Finance Services in Qatar”
from Global Finance.
• “Fastest Growing Brokerage in Qatar” from
International Finance.
• “Most Innovative Mobile Trading Application in
Qatar” from International Finance.
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 outstanding performance in 2023.
Management Review of Operations continued
Shahnawaz Rashid
EGM, Consumer Banking
ANNUAL REPORT 2023
45
The retail balance sheet remained extremely healthy with
lending portfolio valued at QAR 10.4 billion and deposits
growing to QAR 19.9 billion for FY 2023.
Branches, Self-Service Machines, and ATM Network
We are excited to showcase the evolution and strategic
significance of our 31-location-strong physical network, a
cornerstone of Commercial Bank’s distribution approach.
This expansive network is more than just a series of
locations; it’s where our customers find swift access to
services and engage in meaningful conversations with
advisors, receiving financial solutions tailored uniquely to
them.
Our distribution model has undergone a transformative
journey. Today, each location is meticulously designed to
cater to diverse customer segments with services that
are as varied as their needs.
At the forefront are our “Smart” locations, embodying a
modern, tech-forward design that redefine convenience,
offering 24/7 self-service options. Here, customers can
effortlessly print Cheque Books, Credit and Debit Cards in
under five minutes – a testament to our commitment to
efficiency and self-sufficiency.
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.
Our traditional branches remain a vital part of our
network, continuing to efficiently address the complex
financial needs of our customers. Each location, regardless
of its style, is a testament to our dedication to providing
comprehensive, customer-centric financial solutions.
Commercial Bank’s distribution is a dynamic ecosystem, with
each location uniquely contributing to a singular vision –
delivering exceptional banking experiences, tailored to every
customer’s need.
For those seeking an elevated banking experience, our
CB Premium Lounges are a class apart. These spaces are
more than just branches; they are the epitome of luxury and
personalized service. Our Relationship Managers, specialists
in their field, provide bespoke services and advice, aligning
perfectly with our clients’ wealth-building aspirations.
The ambiance in these lounges is designed to reflect the
exclusivity and premium nature of the services offered.
We take immense pride in our Premium Banking services,
consistently setting industry benchmarks in quality and
excellence. These services are the embodiment of our
commitment to delivering exceptional standards to all our
customers.
Our extensive fleet of 305 ATMs spans the nation
strategically, maximizing the efficiency of the network.
Beyond conventional cash transactions, these machines
facilitate bill payments, transfers, and cheque deposits.
Additionally, these specialized units cater to various self-
service needs, such as the instant issuance of new debit
cards, credit cards, and cheque books.
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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 through digital account opening and instant
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 to invest its resources
to further enhance digital solutions to serve our clients and
improve turnaround times from account opening to account
fulfilment.
Retail Internet and Mobile Banking
Motivated by our continued digital success, we maintained
persistent efforts in 2023 to deliver a revamped CBQ Mobile
App.
Given the high adoption rate of digitally active customers,
over 98% of financial transactions are now through
automated channels.
Through the market leading CBQ Mobile App and Internet
Banking services we offer a wide range of digital services
including International Remittances to all the countries,
effortlessly empowering customers to send funds with
a simple click. This includes transfers to bank accounts,
convenient cash pickup services, and seamless transactions
to wallet accounts.
For specific countries, our service offers instant remittances,
enabling customers to send funds to their beneficiaries
in less than 60 seconds. Due to the widespread adoption
of this remittance service among our customers, CB
Remittance stands out as one of our most sought-after and
popular digital offerings.
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.
By collaborating with Western Union, we have broadened the
reach of our expedited payment service to encompass the
developing communities across African regions, enhancing
financial accessibility for a wider population.
Whilst we grew our geographic reach, we continued to
enhance the customer experience with the introduction of
bundled remittance offers where regular customers can buy
discounted packages, and first-time users can benefit from
free transfers.
In addition to continuous digital innovation, the Bank has
pioneered several market-first services, including UPI
payments to India and Mobile cheque deposits. Moreover,
the bank has introduced CB Pay Link for Non-CB customers
and Qatar Mobile Payment (mPay).
To safeguard customers’ accounts and to protect them
from fraud and cybercrime, we continue with 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 of the most important
services launched 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
enhanced by the Bank which facilitates face to face customer
interactions through a virtual platform, innovatively serving
customers and strengthening client relations.
Through this feature customers can complete applications,
exchange documents, and submit instructions using this
service 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 68.
Cards & Payments
Commercial Bank has always been a leading innovator in
the Digital payments space, pioneering the adoption of
cutting-edge solutions for enhancing customer experience
and maintaining market relevance. Commercial Bank has
been amongst the first local banks to establish a fully digital
Management Review of Operations continued
ANNUAL REPORT 2023
47
card proposition that facilitates the seamless acquisition,
management, and utilization of a full-fledge digital card by its
customers.
Cashier-less Checkout: The Bank launched Qatar’s First
and GCC’s second Cashier-less Checkout service, at two of
the country’s most popular retailers; Lulu Hypermarket and
Al Meera.
This innovative and cost-effective frictionless payment
acceptance technology contributes to our direction
supporting the government’s overarching vision (Qatar
National Vision 2030) to digitize payment acceptance
solutions across the country. The new convenience stores
provide fast, secure, and contactless check-out experience
for customers by leveraging Artificial Intelligence (AI)
technology.
Qatar’s First Frictionless Checkout from Commercial Bank
Commercial Bank introduces a unique and new shariah-compliant fund with
Franklin Templeton
Commercial Bank celebrates its seventh Young Bankers Program and its first
Young Investors Program
Commercial Bank Hosted “Investment Opportunities in Qatar’s Stock Market,
new products and insights on the local Economy” Forum
cbq.qa
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Revamping Loyalty and Reward: Engaging and retaining
our loyal customers has always been the Bank’s philosophy
and this is where we believe that a strong loyalty programme
is not only vital but very essential.
• Limited Edition program for our Ultra High Net-Worth
(UHNW) customers where they can redeem their reward
points for anything they wish for, including exclusive
products and services, such as an Hermès bag or
booking a private jet.
• Over 200 merchants catering to different types of
customers preferences which can be easily and instantly
accessed through our digital channels like RIB & MIB.
• Only bank in Qatar to offer a state-of-the-art instant
discount at checkout, CB Fawri. This provides customers
an automatic discount, eliminating the need to
remember or request the discounted offer at any of our
over 586 merchant partners to date.
Financial inclusion and accessibility: Qatar is known to
host a large expatriate workforce, many of whom are low-
salaried and are traditionally an unbanked segment of the
population.
Commercial Bank continues to lead this segment in line
with the government’s vision for wage protection system
(WPS) by running a full-fledged payroll card business model
(PayCard), which proudly captures an estimated 50%+
market share of this segment. Corporates can apply through
a fully digitized registration process, and upload salaries
through a seamless file upload which is fully automated.
PayCard customers are supported by our dedicated CBQ
Mobile App which can be adapted based on their native
language, giving them access and control over their financial
account anytime and anywhere. To further support the app,
the Bank has additionally added telecom services where
customer can top-up credit or data, and pay their monthly
bills.
Further, a multilingual call center to address complaints or
service issues and regular training is conducted in labour
worksites to help PayCard customers download and navigate
the CBQ Mobile App. PayCard plastics are now upgraded to
support contactless Tap N Pay feature.
Wealth Management
The focus on building the Wealth Management proposition
continued throughout 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, across all major asset classes, through strategic
partnerships with leading asset managers across the globe.
Our wealth clients are serviced by qualified and accredited
Wealth Advisors who are empowered 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
towards diversifying their portfolios.
Commercial Bank Financial Services (CBFS)
While delivering comprehensive global wealth management
solutions, our commitment to fortifying our presence in the
local Qatar Exchange Market remains steadfast due to the
market-leading brokerage services provided by Commercial
Bank Financial Services (L.L.C.) (CBFS), a wholly-owned
subsidiary of Commercial Bank, duly licensed by the QFMA.
Ranked among the top 3 brokerage houses in Qatar,
CBFS boasts the formidable position of holding one of the
largest capital bases, exceeding QAR 850 million. Offering
a comprehensive suite of services, CBFS empowers
its customers to trade stocks listed on the Qatar Stock
Exchange, engage in Bonds and T-bills transactions, and
utilize Margin Facilities, Asset Management, and Liquidity
Provision services, ensuring a diverse and robust range
of financial solutions for its clients. In the realm of the local
equity market, CBFS has distinguished itself as a trailblazer in
margin trading, boasting the largest margin book available
to selected clients at competitive rates. Further bolstering its
innovative approach, CBFS aligns seamlessly with the Bank’s
overarching digital innovation strategy through its acclaimed
mobile trading application and online platform.
Management Review of Operations continued
ANNUAL REPORT 2023
49
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 2023 whilst ensuring a liquidity
buffer for the Bank by focusing on liquid and diversified
investments. Its goal in 2024 is to maintain returns
momentum in a challenging geopolitical and monetary
policy environment. 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 2023, 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 2023, Commercial Bank continued its efforts to
improve its overall risk platforms, put in place a risk balanced
performance scorecard, 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 2024, Commercial Bank will continue to upgrade its
technological infrastructure, enhance the coverage of
liquidity management, and strengthen the overall risk
strategy.
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 2023
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. The 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 and Compliance Committee (‘BRCC’),
which is responsible for all aspects of enterprise wide
risk management including, but not limited to, credit risk,
market risk, liquidity risk, operational risk, compliance,
anti-money laundering and regulatory oversight. The
BRCC reviews policy on all risk and compliance issues and
maintains oversight of all Bank risks.
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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.
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 ensure our marketing initiatives and
communication strategies align with the Bank’s sense of
purpose which is making everything possible to customers.
Commercial Bank’s mission is deeply rooted within sustaining
its position as a leader in digital banking. Through exemplary
leadership in digital marketing – alongside our proactive
approach to digital media, first-of-its-kind technologies,
top-tier content offering, and customer engagement on
and through social media – Commercial Bank continues to
pioneer 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 the
fulfilment of Qatar National Vision 2030.
For 2023, our National Day theme was “Celebrating the spirit
of Qatar”. We were inspired to reflect the people’s unity and
patriotism in a design that communicates the compelling
story of every individual and corporation in Qatar. We started
by showing Commercial Bank standing tall and strong in the
middle of Qatar, with the national flag wrapped around it. The
depth of our narrative reflects the safety net that Qatar has
built for us to achieve our successes.
Social Media
Our brand story has been conveying how our
communication strategy is being developed, while following
our Brand DNA and making sure we give our customers the
guidance they deserve. We build our Bank’s strategy on the
following three points: to guide, humanize and innovate.
In addition to investments in digital technologies, we are also
focused on communicating our efforts in a clear and simple
way. 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 which aims 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 keen on humanizing all its communication,
and this is clearly reflected in CB’s continuing commitment to
guide its audience:
• #CBtips: Part of our strategy includes empowering our
customers with financial literacy.
• #CBsafe: We launched our anti-fraud campaign to
further educate our customers on the various financial
techniques out there.
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 2023
53
Commercial Bank has launched several social media
campaigns throughout 2023 that has further emphasized
its role in elevating the digital banking scene in Qatar. From
enabling the first cashierless store to providing customers to
conduct 60-second remittances, the Bank has been offering
customers advanced payment solutions to make their day-
to-day more convenient.
Commercial Bank’s exceptional social media strategy led to
the Bank being recognized by the most reputable awarding
bodies in the industry.
2023 Awards
• “The Top Innovation in Mobile Banking” award in the World
by Global Finance.
• “Best Trade Finance Provider” award in Qatar by Global
Finance.
• “Best Mobile Banking Application” award in Qatar by
International Finance.
• “Best Customer Service Initiative” award in Qatar by
International Finance.
• “The Most Innovative Mobile Trading App” award in Qatar
by International Finance.
• “The Fastest Growing Brokerage House” award in Qatar by
International Finance.
• “The Most Innovative Bank” award in the Middle East by
World Finance.
Commercial Bank wins prestigious awards in 2023
Hussein M Ali Al-Abdulla
EGM, Chief Marketing Officer, and
Alternative Assets
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• “The Best Consumer Mobile Banking App” award in Qatar
by Global Finance.
• “The Best Digital Bank for Trade Finance Services” award
in Qatar by Global Finance.
• “The Best Corporate Mobile Banking App” award in the
Middle East by Global Finance.
Corporate Social Responsibility (CSR)
Commercial Bank’s longstanding commitment to Corporate
Social Responsibility (CSR) has been a pillar in the Bank’s
structure since its inception over forty-eight years ago.
The Bank has committed to positively contributing to the
wider community in support of Qatar National Vision 2030
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.
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. We believe that sports and physical activity play
a vital role in our community. That said, we continuously
promote active and healthy lifestyles and strive to cultivate
values of dedication, teamwork, competition, and good
sportsmanship.
On top of carrying out yearly fitness challenges and
competitions, Commercial Bank has also introduced a
number of tournaments to encourage staff members to
engage in fitness activities throughout 2023. The Bank
hosted the first mixed Volleyball Competition, prepared
exclusively for CB staff, to spread positive energy and
friendly competition while giving employees a chance to
connect with one another. Commercial Bank’s Staff Club are
upholding the Bank’s promise towards fostering a culture
that revolves around well-being and a structured work-life
balance.
Sponsorship programs
Commercial Bank remains committed to positioning Qatar at
the forefront of the sports industry by rounding up the best
international competitors for an annual golf tournament in
Qatar. That said, the Bank and Qatar Golf Association have
been hosting the Commercial Bank Qatar Masters Golf
Tournament; an annual golf tournament on the DP World
Tour Calendar organized by Qatar Golf Association, Qatar
Olympic Committee, Doha Golf Club, and Commercial Bank,
the long-term Title Sponsor. The tournament was first held
in 1998 and has become Qatar, and the world’s, annual “must
attend” sporting and social event.
In parallel, the Bank and Qatar Golf Association also have
hosted the Commercial Bank Qatar Masters Pro-Am
Tournament where local amateur golfers have gotten
the chance to play with professional golfers who have
participated in the tournament. This initiative stands as
testament to the Bank’s impactful contributions role in the
field of sports.
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.
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.
Management Review of Operations continued
ANNUAL REPORT 2023
55
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Health awareness
To fulfill its commitment towards improving the population’s
health in Qatar, Commercial Bank has conducted a variety
of activities and workshops for its employees to raise
awareness on breast cancer early detection. Under the
slogan “Blossom into Hope,” CB female employees had
the opportunity to attend an informative “Breast Cancer
Awareness Session” while enjoying exciting activities held
in parallel. The workshop was delivered by specialists in the
Health Education Department at the Qatar Cancer Society
with a medical team present to offer employees support
as well as distribute vouchers for check-ups. A breast
cancer survivor also shared her inspirational journey with
overcoming to disease.
Commercial Bank’s devotion to employee well-being goes
beyond raising awareness on physical health and includes
emotional wellness as well. The Bank took part in the
“Thriving in the workplace” workshop hosted by MOPH which
provided valuable insights and tools that help employees
navigate the demands of the workplace while maintaining
their mental health.
Educating the public and spreading awareness
In line with our Brand DNA, we strive to offer our customers
the financial guidance they seek. Commercial Bank has
launched a series of campaigns that aspire to spread
awareness in the society, in addition to educating and
directing our customers in their banking journey:
• #CBTips: Our promise to steer our customers in
the right financial path will always be our top priority.
That said, we continue to spread awareness through
our #CBTips series which was designed to empower
consumers with financial literacy. Considering the
huge effect of social media in today’s 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 enables customers to 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: As one of the top banks in Qatar, we are keen
on securing our consumers’ financial assets. Our #CBsafe
campaign has underpinned our commitment as we
continue to offer the community tips on how to identify
the latest scam techniques and how to respond.
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 Bank has introduced the first Young Investors program;
a thorough internship program that aims to empower our
future financial leaders with the necessary skills they need
to pioneer the financial markets. We have given the younger
generation a space where they can enhance their economic
understanding and spread the knowledge given to them by
our financial experts.
Management Review of Operations continued
ANNUAL REPORT 2023
57
Volunteering
Commercial Bank believes in fostering a sense of community
and positively contributing to society’s philanthropic causes.
Staying true to its promise, the Bank hosted an array of
charitable initiatives throughout 2023.
During Ramadan, the Bank’s employees and senior
management members distributed 100 charity boxes to
the less fortunate. Additionally, the CB team celebrated
Garangao night and distributed gifts to children and students
with special needs. The Bank also hosted the “Iftar Jawal”
event on 7 April 2023 and provided iftar boxes to bystanders
and families at road signals.
These initiatives demonstrate Commercial Bank’s collective
dedication to social responsibility and underscores the
Bank’s culture.
Sustainable products
Poised to share the banking scene in Qatar, Commercial
Bank is continuously introducing world-class financial
products that align with the sustainable goals of National
Vision 2023.
The Bank is now offering customers the opportunity to
finance their next hybrid or electric car through CBgreen.
This initiative supports the Qatar National Environment and
Climate Change Strategy, and further solidifies Commercial
Bank’s role as not only a leader in digital banking, but a
catalyst for change.
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 2023 Market Leaders ranking
analysis for the second year in a row.
Human Capital
In 2023, Commercial Bank human capital strategy was
marked by a series of innovative and forward-thinking
initiatives aimed at enhancing organizational performance
and employee engagement. These initiatives included:
• Cultivating a Performance-Driven Culture: Commercial
Bank placed significant emphasis on transforming its
workplace culture to foster entrepreneurial thinking
and high performance. This was achieved through the
implementation of reward strategies that incentivized
agility and innovative thinking across teams.
• Robust Performance Management System: The Bank
enhanced its approach to performance management.
This involved not only evaluating employee performance
but also facilitating career-focused discussions,
ensuring a robust talent pipeline, and investing in leader
development programs. Compliance with risk measures
and a focus on thorough audit processes were also
integral to this approach.
• Strategically and operationally sourcing: Attracting and
recruiting the right talents that will contribute further
in delivering on the Bank’s strategic plan. 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.
• Nationalization Focused: National development is a
strategic cornerstone for The Bank. This commitment
was actualized in 2023 through a focus on nurturing local
talent. The approach included customized development
programs, tailored career planning, and active knowledge
transfer. Additionally, this year saw the promotion of
new national leaders, drawn from our own talent pool,
underscoring our dedication to internal growth and
leadership cultivation.
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• Awards and recognition: Commercial Bank, recognized
for its leadership in nationalization efforts in Qatar,
has also been honored in The Sultanate of Oman for
its significant contributions to national development
in the private sector. This recognition places the bank
among the esteemed organizations in the GCC region.
Additionally, improvements in overall employee
satisfaction have been noted, as evidenced by results
from an external engagement survey.
• Partnerships: Partnering with the ministries and
educational institutions, specifically with the Ministry
of Labour to source national talent and provide
them with career opportunities within the Bank’s
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 2023 provided students with key insight on how to
transfer academic excellence into performance.
Learning and development
• Expanding e-learning and development
opportunities: Recognizing the importance of
continuous learning, Commercial Bank invested in
creating story-based e-learning courses and an
accessible learning portal. These initiatives were centred
around compliance training and providing on-demand
learning opportunities to employees. Additionally, the
company supported employees in their educational
pursuits, reinforcing its commitment to making
Commercial Bank a premier learning organization.
• We invest in making Commercial Bank a great place
for learning. We target our development resources
towards our people who are skilled in sharing knowledge
and training others. This strengthens our creative and
innovative culture.
Strategic compensation and benefits review:
The Board of Directors have played a crucial role in
periodically reviewing and adjusting the compensation
and benefits structure. This ensured that the pay scales
remained fair, competitive, and were effectively linked to the
Bank›s performance, thus aligning employee rewards with
organizational success. The Board of Directors have also
focused on risk management by considering:
• The split between fixed, variable, and incentive
components.
• The balance between profit and risk, and the time
horizons associated with those risks.
We disclose our remuneration policies and practices in our
financial reports.
Management Review of Operations continued
Jassim Al Thani
EGM, Chief Human Capital Officer
ANNUAL REPORT 2023
59
Commercial Bank earns another regional recognition for Nationalization efforts
In Summary
Commercial Bank human capital initiatives in 2023
represented a comprehensive approach to workforce
management, blending strategic planning, talent
development, and a commitment to creating an engaging,
rewarding, and supportive work environment for its
employees. These initiatives not only aimed at enhancing
individual performance but also at fostering a cohesive and
dynamic corporate culture that supports the organization›s
long-term strategic objectives.
Operations
For Commercial Bank, as across much of the globe, 2023
was a year of AI-headlined innovation. Yet these headlines
stood on the foundations of sustained investment in client
experience, data capabilities and technology infrastructure.
They also built upon, and delivered into Commercial Bank’s
ongoing digitization agenda, which is core to the bank’s
strategy and corporate earnings. At Commercial Bank, a
foundational principle is that technological innovation is a
means to support client and business outcomes, rather than
an unguided end of its own.
In 2023, the bank continued to design and execute to:
support increased client preferences for digital solutions,
including utilizing technologies facilitated by mobile devices
(e.g. AI- equipped biometric authentication); enhance
customer experience through product innovations; broaden
branch and service-on-demand distribution channels; and
to invest in future strategic innovation needs. The flexibility
of our operating model continues to allow us to drive rapid
innovation and to provide enhanced client experience.
Increasing client preference for digital solutions
Clients continued to embrace mobile devices to engage
with Commercial Bank. For individual customers, over the
course of 2023, customers engaging via mobile solutions
on a weekly basis increased by 35%. These customers
enjoyed more than 150 services available through the bank’s
award-winning mobile banking solution. For corporate
clients, both online and mobile banking solutions came to
play an increasingly important role. Clients accessing banking
services via mobile devices again increased compared
to 2022. Importantly, there was more than 13% 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 customer experience through product and
service innovations
Adoption of these digital services brings increased
opportunity for: seamless, real time services; the simplified
distribution of numerous new products and services
for Retail customers, and acquisition of richer client
data. Powered by this data, in 2023, Commercial Bank
continued to invest in and deploy AI-enabled solutions.
These include: the use of Natural Language Processing to
automate services otherwise requiring time for document
interpretation and execution; data science and machine
learning solutions for more personalized client offerings
and; client solutions such as AI-enabled voice recognition
systems for safe, easy client access to services.
Bespoke solutions were also created for corporate clients
also seeking to extend their digital reach and service
proposition, including several B2C solutions.
Broadening branch, self-service and on-demand
distribution channels
Commercial Bank also strives to provide an excellent omni-
channel experience, whether through mobile services,
in branches or via self-service channels. Investment was
made in upgrading the physical branch presence, so that
more than 60% of branches now provide a state-of-the-art
experience. Additional new flagship Premium branches were
also brought online.
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. This included a significant
expansion of the ATM fleet in partnership with Woqood
petrol stations.
Ongoing investments in strategic innovation 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, machine
learning 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 2023
61
Acknowledgement
Commercial Bank’s successful business performance in
2023 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. 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.
Empowering Progress,
Enabling Change
At the core of our Sustainability Finance
Framework lies a commitment to
transformative progress. It encapsulates the
essence of our journey, a concise narrative
of our mission to catalyze positive change
and shape a more sustainable, inclusive
future.
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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 2023, we continued to enhance our corporate
governance practices as the Bank’s business evolves and
regulatory requirements change. The Bank’s remuneration
policies were revised in line with the Qatar Central Bank
instructions on ceilings and determinants for remuneration
of the Board of Directors and Executive Management.
Commercial Bank’s Corporate Governance Charter, Board
of Directors Charter, Board Committees Charter, Board
Delegation of Authority and Corporate Affairs Policy were all
reviewed and updated for alignment with the QCB Corporate
Governance Instructions and changes to the Bank’s business.
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
Corporate Governance
ANNUAL REPORT 2023
65
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.
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.
cbq.qa
66
Organizational structure
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 2023. The detailed Annual Corporate
Governance Report 2023 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. The Annual
Corporate Governance Report 2023 can also be viewed on
Commercial Bank’s website at www.cbq.qa
Corporate Governance continued
Group Chief Executive Officer
Board of Directors
Board Risk &
Compliance
Committee
Board Executive
Committee
Board
Remuneration,
Nomination &
Governance
Committee
Board Audit
Committee
EGM,
International
Banking
EGM,
Chief Human
Capital
Officer
EGM,
Wholesale
Banking
EGM,
Treasury &
Investment
Acting Chief
Financial
Officer
EGM,
Retail
Banking
EGM,
Marketing &
Alternative
Assets
EGM,
Chief
Operating
Officer
AGM,
Strategy &
Analytics
Head of
Corporate Affairs
& Company
Secretary
EGM, Chief
Internal Audit
Officer
EGM, Chief Compliance
Officer
EGM, Chief Risk Officer
ANNUAL REPORT 2023
67
Sustainability as a concept and practice has been part of
Commercial Bank’s approach for many years, whether it be
through our longstanding commitment to the Qatar National
Vision 2030 or in-built into our corporate strategic plan
initiated in 2016. Building on this foundation, Commercial
Bank actively supports Qatar’s National Environment and
Climate Change Strategy announced in 2021, the Qatar Stock
Exchange’s ESG disclosure initiative and we are a signatory
to United Nations Global Compact (UNGC), supporting the
ten principles on human rights, labour, environment, and
anti-corruption.
Commercial Bank made good progress in advancing our
sustainability performance in 2023. The Bank launched
its inaugural Sustainable Finance Framework, which will
further our commitment to support projects that enable
the transition to a low carbon and climate resilient economy,
as well as a positive societal impact. The Framework was
externally assessed and validated through a Second
Party Opinion from Sustainalytics. The Board approved
amendments to the Bank’s sustainability Strategy in 2023
to better reflect the Bank’s initiatives in sustainable finance,
including the Sustainable Finance Framework.
In line with the National Environment and Climate Change
Strategy, we target a 25% reduction in Commercial Bank’s
greenhouse gas emissions associated with our own
operations by 2030 versus 2021. A number of new initiatives
were launched in 2023 to reduce our carbon footprint,
including installation of solar panels on the rooftops of
selected Commercial Bank branches, replacing a portion
of the Bank’s car fleet with electric vehicles, and optimizing
our air conditioning and lighting systems to reduce energy
consumption during unoccupied periods. Board and
Executive Management remuneration is linked to ESG,
formalized through the application of the Bank’s revised
corporate performance scorecard, which includes ESG
metrics.
Commercial Bank’s sustainability strategy
Commercial Bank has a five-year strategic plan (2022-
2026) based on the 5Cs: Corporate earnings quality; Client
experience; Creativity and innovation (Digital Creativity);
Culture; and Compliance.
We view sustainability as an integral part of our corporate
strategy, and it is inbuilt within the 5Cs. The sustainability
topics most material to our business and our stakeholders
can be viewed as a natural extension of the 5Cs as they
support the delivery of our corporate strategy. These
material topics are:
1) Sustainable finance
2) Risk management
3) Support for SMEs
4) Financial inclusion and accessibility
5) Responsible procurement and supply chain
management
6) Exceptional client experience
7) Customer privacy and data security
8) Digital innovation
9) Environmental impact of our operations
10) Talent attraction, development, and retention
11) Diversity and inclusion
12) Community investment
13) Governance and Compliance
Sustainability
cbq.qa
68
Sustainability governance
At Board-level, oversight of the Bank’s sustainability
strategy and performance is the responsibility of the Board
Remuneration, Nomination and Governance Committee
(BRNGC). In 2023, the Board approved an amendment to
the Bank’s sustainability strategy to better reflect the Bank’s
initiatives in sustainable finance.
Commercial Bank has a Management-level Sustainability
Committee. Responsibilities include:
• Reviewing and recommending for approval of the BRNGC,
the Bank’s sustainability strategy and commitments.
• Assessing the Bank’s sustainability related risks and
opportunities (including climate change) and mitigations/
opportunities.
• Recommending priority sustainability-related initiatives
for implementation within the Bank, with accountable
working groups.
• Monitoring the Bank’s sustainability performance against
the Bank’s sustainability strategy including oversight of
the impact with external stakeholders.
The Sustainability Committee is chaired by Commercial
Bank’s Executive General Manager (EGM) Chief Risk Officer.
As sustainability is an integral part of our corporate strategy,
EGM-level representatives from across Commercial Bank’s
strategic business units sit on the Sustainability Committee.
Stakeholder engagement
We recognize that engagement with our stakeholders is
critical to the success of our business. By engaging with
our stakeholders, actioning stakeholder feedback and by
delivering on the 5Cs of our five-year strategic plan, we
believe we will achieve the “6th C of Commercial Bank” –
their Confidence and trust.
Sustainable Finance
Financial Inclusion
Risk Management
Support for SMEs
Responsible Procurement and
Supply Chain Management
Exceptional
Client Experience
Customer Privacy
and Data Security
Digital
Innovation
Governance
and Compliance
Talent Attraction,
Development and
Retention
Diversity and Inclusion
Community Investment
Environmental Impact of
our Operations
Corporate Earnings
Quality
Client
Experience
Creativity
& Innovation
Culture
Compliance
5Cs
Sustainability continued
ANNUAL REPORT 2023
69
Below are our key stakeholder groups, and our key engagement methods:
Stakeholder
Engagement methods
Needs and expectations
Customers
• CBQ Mobile App and online banking
• Branches
• Client Engagement and Call Centre
• Website
• Social media
• Digital banking and self-service channels
• Exceptional customer experience
• Competitive products
Investors
• Annual General Meeting
• Quarterly analyst calls
• Annual Investor Analyst Day
• Annual Reports
• Sustainable financial performance
• Transparency and credibility of
communications
• Delivered dividends
Employees
• Quarterly town halls
• Internal communications
• Employee engagement survey
• National Development Programme
• Mandatory training and leader-led training
• CB Staff Club, CB Chamber of Innovation
• Competitive rewards
• Professional development
• Fairness and equal opportunity
Regulators
• Compliance with applicable laws and
regulations
• Public disclosures via QSE, Annual
Corporate
• Governance Report, Annual Report
• Strong governance and risk management
• Compliance with all legal and regulatory
requirements
Community
• Comprehensive CSR programme focused
on the local community
• Making a positive contribution to the Qatari
community
• Employment opportunities
Suppliers
• Close to 600 active suppliers
• Transparent and audited processes for
supplier selection
• Timely payment
• Fair and transparent tender process
Materiality
We conducted a materiality assessment to identify issues that have the most importance to our business (by their significance
of economic, environmental, and social impacts) and our stakeholders.
The Sustainability Committee reviews the materiality matrix while considering our sustainability strategy, Commercial Bank’s
sustainability related risks and opportunities, the needs of our stakeholders, industry trends, the Qatar National Vision 2030,
the Qatar National Environment and Climate Change Strategy and the UNSDGs.
cbq.qa
70
1. Sustainable finance
2. Risk management
3. Support for SMEs
4. Financial inclusion and accessibility
5. Responsible procurement & supply chain management
6. Exceptional client experience
7. Customer privacy and data security
8. Digital innovation
9. Environmental impact of our operations
10. Talent attraction, development and retention
11. Diversity and inclusion
12. Community investment
13. Governance and Compliance
2
Influence on stakeholder assessments and decisions
12
9
4
3 5
7 6
1
8
10
13
11
Significance of economic, environmental, & social impacts
Alignment of material topics with UNSDGs
8 Digital innovation
9 Environmental impact
of our operations
10
Talent attraction,
development and
retention
11 Diversity and inclusion
12 Community investment
13 Governance and
Compliance
1
Sustainable finance
2 Risk management
3 Support for SMEs
4 Financial inclusion and
accessibility
5
Responsible
procurement and supply
chain management
6 Exceptional client
experience
7 Customer privacy and
data security
Sustainability continued
ANNUAL REPORT 2023
71
Sustainable Finance Framework
The Bank launched its inaugural Sustainable Finance Framework in 2023 and intends to use it as a tool to support the
2030 Vision and Qatar’s National Environment and Climate Change Strategy through enabling business growth and
supporting our clients in their transition towards to sustainability.
Further, the Bank, along with its wholly-owned subsidiaries, intends to use the Framework as the basis to issue Green,
Social or Sustainability Bonds, Sukuks and Loans (“Sustainable Financing Instruments”). The Sustainable Financing
Instruments will fund Eligible Sustainable Projects that conform to the sustainable finance principles listed below:
• the International Capital Market Association (“ICMA”) Green Bond Principles (“GBPs”) 2021 (within June 2022 Appendix
1), Social Bond Principles (“SBPs”) 2023 and Sustainability Bond Guidelines (“SBGs”) 2021; and/or
• the Loan Market Association (“LMA”) Green Loan Principles (“GLPs”) 2023 and Social Loan Principles (“SLPs”) 2023.
Key components of the Framework
Commercial Bank will allocate an amount at least equivalent to the net proceeds of the Sustainable Financing Instruments
issued under the Framework to finance and/or re-finance, in whole or in part, sustainable projects which meet the
eligibility criteria of the following Eligible Sustainable Project categories (“Eligible Sustainable Projects”).
Use of
Proceeds
Process
for Project
Evaluation and
Selection
Management
of Proceeds
Reporting
cbq.qa
72
Sustainable Finance Framework
Renewable Energy
Clean Transportation
Green Buildings
Energy Efficiency
Sustainable Water and Wastewater Management
Pollution Prevention and Control
Employment Generation, and Programs Designed to Prevent and/or Alleviate
Unemployment Stemming from Socio-economic Crises
Food Security and Sustainable Food Systems
Access to Essential Services (Healthcare and Education)
Affordable Basic Infrastructure
The Bank has established clear parameters for excluding ineligible projects or activities for financing or investing in line with
regulatory and market standards.
Eligible Green Categories
Eligible Social Categories
Sustainability continued
CONSOLIDATED FINANCIAL STATEMENTS
31 December 2023
cbq.qa
74
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
the ‘Group’), which comprise the consolidated statement of financial position as at 31 December 2023, the consolidated
statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising
material accounting policies and other explanatory information.
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 2023, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board (IFRS Accounting Standards).
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 Ethics Standards Board for Accountants
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 Bank’s 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 period. These matters were 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.
Impairment of loans and advances to customers
See Notes 4(b) and 10 to the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
We focused on this area because:
• of the significance of loans and advances representing
55.7% of total assets.
• impairment of loans and advances involves:
- complex estimates and judgement over both timing
and recognition of impairment including susceptibility
to management bias.
- use of statistical models and methodologies for
determination of expected credit losses. The Group
exercises significant judgments and makes a number
of assumptions in developing its ECL models which
is determined as a function of the assessment of the
probability of default (“PD”), loss given default (“LGD”),
and exposure at default (“EAD”) associated with the
underlying financial assets; and
Our audit procedures, amongst others, to address significant
risks associated with impairment of loans and advances
included:
• Evaluating the appropriateness of the accounting policies
adopted based on the requirements of IFRS 9, our business
understanding, and industry practice.
• Confirming our understanding of management’s processes,
systems and controls implemented, including controls over
expected credit loss (“ECL”) model development.
Controls testing
We performed process walkthroughs to identify the key
systems, applications and controls used in the ECL processes.
We tested the relevant General IT controls over key systems
associated with the ECL process. Key aspects of our control
testing involved the following:
ANNUAL REPORT 2023
75
Report on the audit of the consolidated financial statements (continued)
Key audit matters (continued)
Impairment of loans and advances to customers
See Notes 4(b) and 10 to the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
- complex disclosure requirements regarding credit
quality of the portfolio including explanation of key
judgments and material inputs used in determination
of expected credit losses.
• the need to measure ECLs on an unbiased forward-
looking basis incorporating a range of economic
conditions. Significant management judgment is applied
in determining the economic scenarios used and the
probability weighting applied to them; and adjustments
to the ECL model results are made by management
to address known impairment model limitations or
emerging trends or risks.
• Testing the controls over the inputs and assumptions used
to derive the credit ratings for the borrowers, including
performing and non-performing loans and its monitoring
process;
• Testing the design and operating effectiveness of the key
controls over the completeness and accuracy of the key
inputs and assumption elements into the IFRS 9 ECL models;
• Testing controls over the modelling process, including
governance over model monitoring, validation and
approval;
• Testing key controls relating to selection and implementation
of material economic variables; and
• Testing controls over the governance and assessment of
model outputs and authorisation and review of post model
adjustments and management overlays including selection
of economic scenarios and the probability weights applied
to them.
Test of details
Key aspects of our testing involved:
• Sample testing over key inputs and assumptions impacting
ECL calculations including economic forecasts to confirm
the accuracy of information used;
• Re-performing key aspects of the Group’s significant
increase in credit risk (“SICR”) determinations and selecting
samples of financial instruments to determine whether a
SICR was appropriately identified;
• Re-performing key elements of the Group’s model
calculations and assessing performance results for
accuracy; and
• Selecting a sample of post model adjustments and
management overlays in order to assess the reasonableness
of the adjustments by challenging key assumptions, testing
the underlying calculation and testing any relevant inputs
being used.
Use of specialists
For the relevant portfolios examined, we have involved KPMG
specialists to assist us in assessing associated IT system
controls and challenging key management assumptions used
in determining expected credit losses. Key aspects include:
• Involving our information technology specialists to test
controls over the associated IT systems.
cbq.qa
76
Report on the audit of the consolidated financial statements (continued)
Key audit matters (continued)
Impairment of loans and advances to customers (continued)
See Notes 4(b) and 10 to the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
• Involving our credit risk specialists in:
- evaluating the appropriateness of the Groups’ ECL
methodologies (including the staging criteria used);
- re-performing the calculations of certain components
of the ECL model (including the staging criteria);
- evaluating the appropriateness of the Group’s
methodology for determining the economic scenarios
used and the probability weighting applied to them; and
- evaluating the overall reasonableness of the
management economic forecast by comparing it to
external market data and our understanding of the
underlying sector and macroeconomic trends.
Disclosures
• Evaluating the adequacy of the Group’s disclosure in
relation to use of significant estimates and judgment and
credit quality of loans and advances by reference to the
requirements of relevant accounting standards.
Emphasis of Matter - comparative information
We draw attention to Note 40 to the consolidated financial statements which indicates that the comparative information
presented as at and for the year ended 31 December 2022 has been restated. Our opinion is not modified in respect of this
matter.
Other Matter - comparative information
The consolidated financial statements of the Group as at and for the years ended 31 December 2022 and 31 December 2021
(from which the statement of financial position as at 1 January 2022 has been derived), excluding the adjustments described in
Note 40 to the consolidated financial statements were audited by another auditor who expressed an unmodified opinion on
those financial statements on 16 February 2023 and 22 February 2022.
As part of our audit of the consolidated financial statements as at and for the year ended 31 December 2023, we audited the
adjustments described in Note 40 that were applied to restate the comparative information presented as at and for the year
ended 31 December 2022 and the statement of financial position as at 1 January 2022. We were not engaged to audit, review,
or apply any procedures to the consolidated financial statements for the years ended 31 December 2022 or 31 December 2021
(not presented herein) or to the consolidated statement of financial position as at 1 January 2022, other than with respect to the
adjustments described in Note 40 to the consolidated financial statements. Accordingly, we do not express an opinion or any
other form of assurance on those respective financial statements taken as a whole. However, in our opinion, the adjustments
described in Note 40 are appropriate and have been properly applied.
Independent Auditor’s Report continued
ANNUAL REPORT 2023
77
Report on the audit of the consolidated financial statements (continued)
Other Information
The Board of Directors is responsible for the other information. The other information comprises the information included in the
Bank’s Annual Report but does not include the consolidated financial statements and our auditor’s report thereon. The 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 and will 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 identified
above 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.
Responsibilities of Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS Accounting Standards, and for such internal control as the Board of Directors determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
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 a 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 are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users 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 scepticism throughout
the audit. We also:
•
Identify and assess the risks 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 the 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 the reasonableness of accounting estimates and related
disclosures made by the Board of Directors.
cbq.qa
78
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (continued)
•
Conclude on the appropriateness of the Board of Directors’ 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 our auditor’s report to the related disclosures in the consolidated financial statements or, if such
disclosures are 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.
•
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 period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure 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
As required by the Qatar Commercial Companies Law No. 11 of 2015, whose certain provisions were subsequently amended by
Law No. 8 of 2021 (“amended QCCL”), we also report that:
i.
We have obtained all the information and explanations we considered necessary for the purposes of our audit.
ii. The Bank has maintained proper accounting records and its consolidated financial statements are in agreement therewith.
iii. The report of the Board of Directors is expected to be made available to us after the date of this auditor’s report.
iv. We are not aware of any violations of the applicable provisions of the amended QCCL or the terms of the Bank’s Articles of
Association having occurred during the year which might have had a material effect on the Bank’s consolidated financial
position or performance as at and for the year ended 31 December 2023.
Gopal Balasubramaniam
Doha - State of Qatar
KPMG
Date: 7 March 2024
Qatar Auditor’s Registry Number 251
Licensed by QFMA: External Auditor’s License No. 120153
Independent Auditor’s Report continued
ANNUAL REPORT 2023
79
Consolidated Statement of
Financial Position
QAR ‘000s
As at
Notes
31 December
2023
31 December
2022
(Restated)
1 January
2022
(Restated)
ASSETS
Cash and balances with central banks
8
8,631,193
8,030,334
17,915,385
Due from banks
9
20,525,334
20,843,798
10,942,011
Loans and advances to customers
10
91,490,410
98,016,182
98,003,163
Investment securities
11
30,762,358
29,835,260
26,722,691
Investment in associates and a joint arrangement
12
3,373,307
3,101,753
2,961,240
Property and equipment
13
3,062,799
3,050,360
2,753,339
Intangible assets
14
62,410
66,040
75,375
Other assets
15
6,468,460
5,958,682
5,673,777
TOTAL ASSETS
164,376,271
168,902,409
165,046,981
LIABILITIES
Due to banks
16
18,805,257
24,054,014
17,776,904
Customer deposits
17
76,541,228
83,167,492
81,958,484
Debt securities
18
7,899,400
10,714,316
15,285,788
Other borrowings
19
26,266,888
17,071,747
16,666,973
Other liabilities
20
10,457,673
9,723,904
10,651,030
TOTAL LIABILITIES
139,970,446
144,731,473
142,339,179
EQUITY
Share capital
21
4,047,254
4,047,254
4,047,254
Legal reserve
21
10,024,432
9,877,879
9,875,823
General reserve
21
26,500
26,500
26,500
Risk reserve
21
2,274,574
2,274,574
2,131,459
Fair value reserve
21
(399,282)
(263,956)
332,601
Cash flow hedge reserve
21
(155,061)
(103,079)
59,629
Foreign currency translation reserve
21
(2,718,529)
(2,690,920)
(2,845,211)
Other reserves
21
1,137,954
884,977
684,027
Revaluation reserve
21
1,140,161
1,082,336
1,018,411
Employee incentive phantom scheme shares
21
(1,139,524)
(1,114,872)
(934,016)
Retained earnings
4,347,343
4,330,240
2,491,315
Instruments eligible for additional Tier 1 capital
21
5,820,000
5,820,000
5,820,000
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE BANK
24,405,822
24,170,933
22,707,792
Non-controlling interests
3
3
10
TOTAL EQUITY
24,405,825
24,170,936
22,707,802
TOTAL LIABILITIES AND EQUITY
164,376,271
168,902,409
165,046,981
The consolidated financial statements were approved by the Board of Directors on 24 January 2024 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 41 form an integral part of these consolidated financial statements.
cbq.qa
80
QAR ‘000s
For the year ended 31 December
Notes
2023
2022
Interest income
24
9,537,759
7,330,002
Interest expense
25
(5,670,418)
(3,366,948)
Net interest income
3,867,341
3,963,054
Fee and commission income
26
1,637,736
1,334,989
Fee and commission expense
27
(832,291)
(551,386)
Net fee and commission income
805,445
783,603
Net foreign exchange gain
28
528,366
415,341
Net income from investment securities
29
248,669
1,620
Other operating income
30
39,672
130,381
Net operating income
5,489,493
5,293,999
Staff costs
31
(771,381)
(595,181)
Depreciation
13
(237,134)
(232,897)
Amortization of intangible assets
14
(66,555)
(69,285)
Other expenses
32
(365,754)
(240,718)
Operating expenses
(1,440,824)
(1,138,081)
Operating profit
4,048,669
4,155,918
Net impairment reversals / (losses) on investment securities
5,798
(11,422)
Net impairment losses on loans and advances to customers
10
(990,711)
(987,609)
Net impairment reversals / (losses) on other financial assets
109,201
(148,654)
Other provisions
(41,679)
(115,696)
3,131,278
2,892,537
Net monetary losses due to hyperinflation
(334,983)
(189,380)
Profit before share of results of associates and a joint arrangement
2,796,295
2,703,157
Share of results of associates and a joint arrangement
12
294,170
222,296
Profit before tax
3,090,465
2,925,453
Income tax expense
33
(80,238)
(114,345)
Profit for the year
3,010,227
2,811,108
Attributable to:
Equity holders of the bank
3,010,227
2,811,108
Non-controlling interests
-
-
Profit for the year
3,010,227
2,811,108
Earnings per share
Basic/Diluted earnings per share (QAR)
34
0.71
0.66
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
Consolidated Statement of Income
ANNUAL REPORT 2023
81
QAR ‘000s
For the year ended 31 December
Note
2023
2022
Profit for the year
3,010,227
2,811,108
Other comprehensive income for the year:
Items that are, or will be subsequently reclassified to profit or loss:
Foreign currency translation differences from foreign operation
22
(571,127)
(2,135,828)
Hyperinflation impact
22
543,518
2,290,119
Share of other comprehensive income / (loss) of investment in associates
and a joint arrangement
22
13,654
(64,370)
Net movement in cash flow hedge reserve:
22
Net movement in cash flow hedges-effective portion of changes in fair value
22
(257,768)
(162,708)
Net amount transferred to consolidated statement of income
22
205,786
-
Net change in fair value of investments in debt securities designated at
FVOCI:
22
Net change in fair value
22
(27,466)
(782,712)
Net amount transferred to consolidated statement of income
22
(1,381)
(39)
Items that will not be subsequently reclassified to profit or loss:
Net change in fair value of equity investments designated at FVOCI
22
(153,524)
424,246
Share of other comprehensive income of investment in associates and a
joint arrangement
22
4,922
3,933
Gain on revaluation on land and buildings
57,825
63,925
Other comprehensive loss for the year
(185,561)
(363,434)
Total comprehensive income for the year
2,824,666
2,447,674
Attributable to:
Equity holders of the bank
2,824,666
2,447,674
Non-controlling interests
-
-
Total comprehensive income for the year
2,824,666
2,447,674
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
Consolidated Statement of
Comprehensive Income
cbq.qa
82
For the year ended 31 December
2023
Notes
Share
Capital
Legal
Reserve
General
Reserve
Risk
Reserve
Fair Value
Reserve
Cash Flow
Hedge
Reserve
Balance as at 1 January 2023
4,047,254
9,877,879
26,500
2,274,574
(263,956)
(103,079)
Restatement
40
-
-
-
-
-
-
Balance as at 1 January
2023-restated
4,047,254
9,877,879
26,500 2,274,574 (263,956) (103,079)
Profit for the year
-
-
-
-
-
-
Other comprehensive loss
22
-
-
-
-
(163,795)
(51,982)
Total comprehensive income for
the year
-
-
-
-
(163,795)
(51,982)
Transfer to legal reserve
21
-
146,553
-
-
-
-
Transfer to retained earnings upon
disposal of FVOCI equity
investments
-
-
-
-
28,469
-
Dividend for instruments eligible
for additional capital
-
-
-
-
-
-
Net movement in other reserves
-
-
-
-
-
-
Net movement in the Employee
incentive phantom scheme shares
-
-
-
-
-
-
Provision for Sports and Social
Activities Support Fund
23
-
-
-
-
-
-
Dividends for the year 2022
21
-
-
-
-
-
-
Balance as at 31 December 2023
4,047,254 10,024,432
26,500 2,274,574 (399,282) (155,061)
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
Consolidated Statement of
Changes in Equity
ANNUAL REPORT 2023
83
QAR ‘000s
Foreign
Currency
Translation
Reserve
Other
Reserves
Revaluation
Reserve
Employees
incentive
phantom
scheme
shares
Retained
Earnings
Instruments
Eligible for
Additional
Tier 1 Capital
Total Equity
Attributable
to Equity
Holders of
the Bank
Non-
Controlling
Interests
Total Equity
(2,690,920)
884,977
1,082,336
(1,114,872)
4,330,240
5,820,000
24,170,933
3
24,170,936
-
-
-
- (1,318,000)
-
(1,318,000)
-
(1,318,000)
(2,690,920)
884,977 1,082,336 (1,114,872) 3,012,240 5,820,000 22,852,933
3 22,852,936
-
-
-
-
3,010,227
-
3,010,227
-
3,010,227
(27,609)
-
57,825
-
-
-
(185,561)
-
(185,561)
(27,609)
-
57,825
-
3,010,227
-
2,824,666
-
2,824,666
-
-
-
-
(146,553)
-
-
-
-
-
-
-
-
(28,469)
-
-
-
-
-
-
-
-
(283,720)
-
(283,720)
-
(283,720)
-
252,977
-
-
(252,977)
-
-
-
-
-
-
-
(24,652)
123,665
-
99,013
-
99,013
-
-
-
-
(75,256)
-
(75,256)
-
(75,256)
-
-
-
-
(1,011,814)
-
(1,011,814)
-
(1,011,814)
(2,718,529) 1,137,954
1,140,161 (1,139,524)
4,347,343 5,820,000 24,405,822
3 24,405,825
cbq.qa
84
Consolidated Statement of
Changes in Equity continued
For the year ended 31 December
2022
Notes
Share
Capital
Legal
Reserve
General
Reserve
Risk
Reserve
Fair Value
Reserve
Cash Flow
Hedge
Reserve
Balance as at 1 January 2022
4,047,254
9,875,823
26,500
2,131,459
332,601
59,629
Restatement
40
-
-
-
-
-
-
Balance as at 1 January
2022-restated
4,047,254
9,875,823
26,500
2,131,459
332,601
59,629
Profit for the year
-
-
-
-
-
-
Other comprehensive loss
22
-
-
-
-
(418,942)
(162,708)
Total comprehensive income for
the year
-
-
-
-
(418,942)
(162,708)
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
-
-
-
-
-
-
Net movement in the Employee
incentive phantom scheme shares
-
-
-
-
-
-
Provision for Sports and Social
Activities Support Fund
23
-
-
-
-
-
-
Dividends for the year 2021
21
-
-
-
-
-
-
Net movement in non-controlling
interests
-
-
-
-
-
-
Balance as at 31 December 2022 -
Restated
4,047,254
9,877,879
26,500
2,274,574
(263,956)
(103,079)
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
ANNUAL REPORT 2023
85
QAR ‘000s
Foreign
Currency
Translation
Reserve
Other
Reserves
Revaluation
Reserve
Employees
incentive
phantom
scheme
shares
Retained
Earnings
Instruments
Eligible for
Additional
Tier 1 Capital
Total Equity
Attributable to
Equity Holders
of the Bank
Non-
Controlling
Interests
Total Equity
(2,845,211)
684,027
1,018,411
-
2,922,719
5,820,000
24,073,212
10
24,073,222
-
-
-
(934,016)
(431,404)
-
(1,365,420)
-
(1,365,420)
(2,845,211)
684,027
1,018,411
(934,016)
2,491,315
5,820,000
22,707,792
10
22,707,802
-
-
-
-
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)
-
-
-
-
-
-
-
(180,856)
197,882
-
17,026
-
17,026
-
-
-
-
(70,278)
-
(70,278)
-
(70,278)
-
-
-
-
(647,561)
-
(647,561)
-
(647,561)
-
-
-
-
-
-
-
(7)
(7)
(2,690,920)
884,977
1,082,336
(1,114,872)
4,330,240
5,820,000
24,170,933
3
24,170,936
cbq.qa
86
QAR ‘000s
For the year ended 31 December
Notes
2023
2022
Cash flows from operating activities
Profit before tax
3,090,465
2,925,453
Adjustments for:
Net impairment losses on loans and advances to customers
990,711
987,609
Net impairment (reversals) / losses on investment securities
(5,798)
11,422
Net impairment (reversals) / losses on other financial assets
(109,201)
148,654
Depreciation
13
237,134
232,897
Amortization of intangible assets and transaction costs
175,235
102,624
Net (gains) losses from investment securities
(13,522)
179,164
Other provisions
41,679
115,696
Loss on disposal of property and equipment
2,605
-
Net monetary losses due to hyperinflation
334,983
189,380
Share of results of associates and a joint arrangement
(294,170)
(222,296)
Operating profit before working capital changes
4,450,121
4,670,603
Working capital changes
Change in due from banks
772,503
(5,447,296)
Change in loans and advances to customers
2,671,992
(3,313,565)
Change in other assets
(428,091)
(462,288)
Change in due to banks
(4,886,157)
6,329,390
Change in customer deposits
(5,000,509)
3,335,135
Change in other liabilities
225,590
(455,911)
Contribution to social and sports fund
(70,278)
(57,606)
Cash (used in) / from Operations
(2,264,829)
4,598,462
Income tax paid
(73,499)
(7,784)
Net cash flows (used in) / from operating activities
(2,338,328)
4,590,678
Cash flows from investing activities
Acquisition of investment securities
(7,683,992)
(10,232,133)
Dividend received from associates and a joint arrangement
21
41,193
21,346
Proceeds from sale/maturity of investment securities
6,269,049
5,274,969
Acquisition of property and equipment and intangible assets
(213,079)
(308,348)
Proceeds from the sale of property and equipment and other assets
13,419
21,743
Net cash flows (used in) investing activities
(1,573,410)
(5,222,423)
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
Consolidated Statement
of Cash Flows
ANNUAL REPORT 2023
87
The attached notes 1 to 41 form an integral part of these consolidated financial statements.
QAR ‘000s
For the year ended 31 December
Notes
2023
2022
Cash flows from financing activities
Proceeds from issue of debt securities
18
662,601
1,050,165
Repayment of debt securities
18
(3,569,450)
(5,342,627)
Repayment of other borrowings
19
(5,391,521)
(7,374,297)
Proceeds from other borrowings
19
15,324,265
8,333,786
Payment of lease liability
(131,883)
(117,727)
Payment on coupon of instrument eligible for additional Tier 1 Capital
(283,720)
(283,720)
Dividends paid
(1,011,814)
(647,561)
Net cash flows from / (used in) financing activities
5,598,478
(4,381,981)
Net increase / (decrease) in cash and cash equivalents
1,686,740
(5,013,726)
Effect of exchange rate fluctuation
(360,582)
353,006
Cash and cash equivalents as at 1 January
14,300,364
18,961,084
Cash and cash equivalents at the end of the year
36
15,626,522
14,300,364
Net cash flows from interest and dividend from operating activities:
Interest paid
5,298,394
2,894,563
Interest received
9,557,055
7,698,391
Dividend received
235,147
37,829
Consolidated Statement
of Cash Flows continued
cbq.qa
88
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.
Legal subsidiaries of the Group are as follows:
Name of subsidiary
Country of
incorporation
Capital of the
subsidiary
Activity of the
subsidiary
Percentage of
ownership
2023
2022
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-
(Under liquidation)
100%
100%
CB Real Estate Properties
L.L.C.
Qatar
QAR 1,000
Advisory services
100%
100%
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with IFRS Accounting 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).
(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’);
Notes to the Consolidated
Financial Statements
As at and for the year ended 31 December 2023
QAR ‘000s
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
89
2. BASIS OF PREPARATION (continued)
(b) Basis of measurement (continued)
•
land and buildings;
•
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;
•
Staff cost liability under IFRS 2; and
•
Non-financial assets acquired in settlement of Loans and advances.
(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 which 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. MATERIAL 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 2023
The following standards, amendments and interpretations, became effective as of 1 January 2023, are relevant to the
Group:
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
Definition of Accounting Estimate (Amendments to IAS 8)
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12
These have no material impact on the consolidated financial statements.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
90
3. MATERIAL ACCOUNTING POLICIES (continued)
(a) New standards, amendments and interpretations (continued)
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and include:
•
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional
implementation of the Pillar Two model rules; and
•
Disclosure requirements for affected entities to help users of the financial statements better understand an entity’s
exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.
The Group has adopted International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12) upon their release on 23
May 2023. The amendments provide a temporary mandatory exception from deferred tax accounting for the top-up tax,
which is effective immediately, and require new disclosures about the Pillar Two exposure in the year end financial
statements.
The Pillar Two model rules aim to ensure that large multinational groups pay taxes at least at a minimum rate of 15 percent
on income arising in each jurisdiction in which they operate by applying a system of top-up taxes. There are three active
mechanisms under Pillar Two model rules that countries can adopt: the income inclusion rule, the undertaxed payment rule
and a qualified domestic minimum top-up tax. They are often referred to as ‘global minimum top-up tax’ or ‘top-up tax’.
The Group is in the scope of the Pillar Two model rules as its revenue is more than EUR 750 million/year. However, since
none of the jurisdictions in which the Group operates had enacted or substantively enacted the tax legislation related to the
top-up tax as at the reporting date, there is no impact on the Group’s consolidated financial statements as at and for the year
ended 31 December 2023.
In light of the exception from deferred tax accounting, management is focusing its assessment on the potential current tax
impacts of the top-up tax. Once changes to the tax laws in any jurisdiction in which the Group operates are enacted or
substantively enacted, the Group may be subject to the top-up tax.
Through the issuance of its amended tax law No. 11 of 2022, the State of Qatar has committed to introducing global minimum
tax with minimum effective tax rate of 15%. Further information in relation to the implementation, compliance or
administrative provisions related to the global minimum tax are expected to be issued by the General Tax Authority as
amendments to the Executive Regulations of the amended tax law in the near future.
At 31 December 2023, the Group did not have sufficient information to determine the potential quantitative impact.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
91
3. MATERIAL 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.
Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
1 January 2024
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
1 January 2024
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
1 January 2024
Non-current liabilities with covenants (Amendments to IAS 1)
1 January 2024
Lack of exchangeability (Amendments to IAS 21)
1 January 2025
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
Deferred indefinitely
(b) Basis of consolidation
(i) Business combination
For acquisitions meeting the definition of a business under IFRS 3, the acquisition method of accounting is used as at
the acquisition date, which is the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as the total of:
•
The fair value of the consideration transferred; plus
•
The recognised amount of any non-controlling interest in the acquiree; plus if the business combination is
achieved in stages, the fair value of the existing equity interest in the acquiree; less
•
The net recognised amount (generally fair value) of the identifiable assets acquired, including any assets which the
acquiree has not previously recognized, and liabilities assumed.
When this total is negative, a bargain purchase gain is recognised immediately in the consolidated statement of income.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognised in the consolidated statement of income.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(b) Basis of consolidation (continued)
(i) Business combination (continued)
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.
(ii) Non-controlling interests (NCI)
In accordance with IFRS 3R, 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 Bank also assesses special purposes
vehicles (‘SPVs’) for control particularly when it is exposed to (has rights to) variable returns from its involvement with
the SPV, and has the ability to affect those returns through its power over the investee. Control requires power,
exposure to variability of returns and a linkage between the two.
The accounting policies of subsidiaries are consistent with the accounting policies adopted by the Group.
Intra-group balances, and income and expenses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(b) Basis of consolidation (continued)
(iv) 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.
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.
(v) 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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(c) Foreign currency (continued)
(i) Foreign currency transactions and balances (continued)
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 except for the foreign currency differences resulting from the translation of the qualifying cash flow
hedges to the extent that the hedges are effective, which are recognized in the other comprehensive income.
(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’.
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.
The financial assets and financial liabilities are initially measured at fair value, plus any directly attributable transaction
costs for items not classified to be measured at FVTPL.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(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.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(ii) Classification (continued)
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.
(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, any cumulative gain / loss recognized in OCI as well as 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 recognized in profit or loss, except in case of equity
securities, where such gain or loss may be reclassified within equity.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(iii) Derecognition (continued)
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.
When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction
is accounted for as a secured financing transaction similar to repurchase transactions as the Group retains all or
substantially all the risks and rewards of ownership of such assets.
In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a
financial asset and it retains control over the asset, the Group continues to recognise the asset to the extent of its
continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred
asset.
In certain transactions the Group retains the obligation to service the transferred financial asset for a fee. The transferred
asset is derecognised if it meets the derecognition criteria. An asset or liability is recognised for the servicing contract,
depending on whether the servicing fee is more than adequate (asset) or is less than adequate (liability) for performing
the servicing.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
Interest Rate Benchmark Reform
When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortised
cost changed as a result of interest rate benchmark reform, the Group updated the effective interest rate of the financial
asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the
contractual cash flows is required by interest rate benchmark reform if the following conditions are met:
– the change is necessary as a direct consequence of the reform; and
– the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the
basis immediately before the change.
When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the
contractual cash flows required by interest rate benchmark reform, the Group first updated the effective interest rate
of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After
that, the Group applied the policies on accounting for modifications to the additional changes.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(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.
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).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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99
3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(vi) Measurement principles (continued)
•
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.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(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:
– Balances with central banks and due from banks
– Financial assets that are debt instruments;
– Loans and advances to customers; 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.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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ANNUAL REPORT 2023
101
3. MATERIAL ACCOUNTING POLICIES (continued)
(d) Financial assets and financial liabilities (continued)
(vii) Expected credit losses (ECL) / Impairment (continued)
Measurement of ECL
The key inputs into the measurement of ECL are:
– Probability of default (“PD”) - the Probability of default is an estimate of the likelihood of default over a given time
horizon.
– Exposure at default (“EAD”) - The exposure at default is an estimate of the exposure at a future default date,
considering expected changes in the exposure after the reporting date.
– Loss given default (“LGD”) - The loss given default is an estimate of the loss arising in the case where a default
occurs at a given time. It is based on the difference between the contractual cash flows due and those that the
lender would expect to receive, including from the realization of any collateral. It is usually expressed as a
percentage of the EAD.
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: If the Group determines that the guarantee is not an integral element of the financial
asset, then it recognizes an asset for the right to compensation for credit losses, with any subsequent gains or
losses to be presented in the profit or loss.
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 2023
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3. MATERIAL 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) Due from banks
Due from banks are financial assets which are mainly money market placements with fixed or determinable payments and
fixed maturities that are not quoted in an active market. Money market placements are not entered into with the intention of
immediate or short-term resale. Due from banks are initially measured at cost, being the fair value of the consideration
given. Following the initial recognition, due from banks are stated at amortised cost.
(g) 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 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(h) Investment securities
The investment securities include:
– 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 consolidated statement of income;
– 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 consolidated statement of income 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.
(i) Derivatives
Derivatives are initially recognised, and subsequently measured at fair value with transaction costs taken directly to the
consolidated statement of consolidated statement of income. The fair value of a derivative is the equivalent of the unrealised
gain or loss from marking to market the derivative or using valuation techniques, mainly discounted cash flow models.
The method of recognising the resulting fair value gains or losses depends on whether the derivative is held for trading, or
is designated as a hedging instrument and, if so, the nature of the risk being hedged.
(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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(i) Derivatives (continued)
(i) Derivatives held for risk management purposes and hedge accounting (continued)
On initial designation of the hedge, the Group formally documents the relationship between the hedging derivative
instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking the hedge,
together with the method that will be used to assess the effectiveness of the hedging relationship. The Group makes
an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, as to whether the
hedging instrument(s) is (are) expected to be highly effective in offsetting the changes in the fair value or cash flows of
the respective hedged item(s) during the period for which the hedge is designated, and on an ongoing basis. The
Group makes an assessment for a cash flow hedge of a forecast transaction, as to whether the forecast transaction is
highly probable to occur and presents an exposure to variations in cash flows that could ultimately affect the
consolidated statement of income.
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.
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 consolidated statement of income, changes in the fair value of the
derivative are recognised immediately in consolidated 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 consolidated 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
consolidated statement of income, the effective portion of changes in the fair value of the derivative is recognized in
other comprehensive income inline with SOCI. The amount recognised in other comprehensive income is reclassified
to consolidated statement of income as a reclassification adjustment in the same period as the hedged cash flows
affect consolidated statement of income, and in the same line item in the consolidated statement of comprehensive
income. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in consolidated
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 consolidated statement of
income. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is
reclassified immediately to consolidated statement of income as a reclassification adjustment.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or
loss (for example, when the forecast sale that is hedged takes place).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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ANNUAL REPORT 2023
105
3. MATERIAL ACCOUNTING POLICIES (continued)
(i) Derivatives (continued)
(ii) Other derivatives
Group has trading and non-trading derivatives which consists of forwards, swaps, interest rate swaps, total return
swaps and equity derivatives. Trading derivatives are sold by the Group 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.
When a derivative is not held for trading, and is not designated in a qualifying hedge relationship, all changes in its fair
value are recognised immediately in the consolidated statement of income.
(j) 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.
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 consolidated statement of income.
(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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(j) Property and equipment (continued)
(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
(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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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ANNUAL REPORT 2023
107
3. MATERIAL ACCOUNTING POLICIES (continued)
(k) 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 is measured at cost less impairment.
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 of the CGU,
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.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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3. MATERIAL ACCOUNTING POLICIES (continued)
(l) 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. In assessing value in use, the
estimated future cash flows are 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.
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.
The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate
assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the
CGU to which the corporate asset is allocated.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date, for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(m) 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.
(n) 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.
(o) 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 in the consolidated
statement of income, when they are due.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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ANNUAL REPORT 2023
109
3. MATERIAL ACCOUNTING POLICIES (continued)
(o) Employee benefits (continued)
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).
The cost of cash settled transactions is measured at fair value at the grant date using the 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.
(p) 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.
(q) 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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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110
3. MATERIAL ACCOUNTING POLICIES (continued)
(q) Interest income and expense (continued)
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.
(r) 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.
(s) 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 2023
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ANNUAL REPORT 2023
111
3. MATERIAL ACCOUNTING POLICIES (continued)
(t) Dividend income
Dividend income is recognised when the right to receive dividend income is established.
(u) 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. Tax expenses are recognized in consolidated statement of income, except to the extent these are
pertaining to the items presented in OCI.
(v) 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.
(w) 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.
(x) 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.
(y) Repossessed collateral
Repossessed collateral against settlement of customer debts are stated within the consolidated statement of financial
position under “Other assets” at their fair 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.
(z) Appropriations for Instruments Eligible for Additional Tier 1 Capital
Appropriations for Instruments Eligible for Additional Tier 1 Capital are treated as dividends.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
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112
3.
MATERIAL ACCOUNTING POLICIES (continued)
(aa) 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%.
From 1 April 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
31 December 2022
1,128.45
31 December 2023
1,859.38
Adjustment of the historical carrying values of non-monetary assets and liabilities and the various items of equity from their
date of acquisition or inclusion in the consolidated statement of financial position to the end of the reporting period to
reflect the changes in purchasing power of the currency caused by inflation, according to the indices published by the
Turkish Statistical Institute. Since CBQ Group’s comparative amounts are presented in a stable currency, these comparative
amounts are not restated. The statement of comprehensive income in 2022 included the cumulative impact of prior years.
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.
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 consolidated statement of income.
(ab) 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 2023
QAR ‘000s
ANNUAL REPORT 2023
113
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 Financial Crimes Control including Anti-Money Laundering, Combating Financing of
Terrorism, Anti-Fraud, Anti Bribery and Corruption requirements, criteria and control mechanisms for all activities
involving Bank-wide related risk.
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 2023
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114
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.
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) Digital Innovation &Technology Committee (DTC) 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.
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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
115
4. FINANCIAL RISK MANAGEMENT (continued)
a) Introduction and overview (continued)
Risk and other committees (continued)
13) Operational Risk Committee (ORC) would oversee and facilitate implementation of Operational Risk Management
Framework in the Bank. The resolution of operational risk issues generally involves more than one unit in the Bank and
hence a cross functional team is required to address these issues effectively.
14) Product and Change Risk Committee (PCRC) will validate new products, service major changes before go live. Analysing
potential risk and mitigation plans that can affect the bank and its customers.
15) Compliance Risk Committee (CRC) would facilitate / oversight the implementation of the Compliance and Financial
Crimes Risk Management Framework in the Bank including the AML/CTF, Sanctions and Fraud controls. The resolution
of compliance and Financial Crimes Control (FCC) issues generally involve more than one unit in the Bank and hence a
cross functional team is required to address these issues effectively.
(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’).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
116
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(i) Credit risk measurement (continued)
1. Loans and advances (continued)
(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.
(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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
117
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(ii) Risk limit control and mitigation policies (continued)
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 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.
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 2023
QAR ‘000s
cbq.qa
118
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(iii) Maximum exposure to credit risk before collateral held or other credit enhancements
2023
2022
Credit risk exposures relating to assets recorded on the consolidated
statement of financial position are as follows:
Balances with central banks
7,295,132
5,349,035
Due from banks
20,525,334
20,843,798
Loans and advances to customers
91,490,410
98,016,182
Investment securities - debt
29,654,103
28,162,166
Other assets
2,139,072
2,013,092
Total as at 31 December
151,104,051
154,384,273
Other credit risk exposures are as follows:
Guarantees
15,427,939
17,631,602
Letters of credit
3,495,074
3,034,342
Unutilized credit facilities
5,120,125
3,855,417
Total as at 31 December
24,043,138
24,521,361
175,147,189
178,905,634
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.
2023
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Balances with central banks
6,121,185
-
1,173,947
-
7,295,132
Due from banks
6,899,750
2,284,837
3,993,713
7,347,034
20,525,334
Loans and advances to customers
81,878,112
833,025
7,452,489
1,326,784
91,490,410
Investment securities - debt
24,411,290
1,932,244
2,524,846
785,723
29,654,103
Other assets
1,929,739
-
209,333
-
2,139,072
121,240,076
5,050,106
15,354,328
9,459,541 151,104,051
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
119
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(iv) Concentration of risks of financial assets with credit risk exposure (continued)
Geographical sectors (continued)
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
2023
Qatar
Other GCC
Other
Middle east
Rest of
the world
Total
Guarantees
9,753,446
550,471
776,747
4,347,275
15,427,939
Letters of credit
2,721,877
109,200
224,119
439,878
3,495,074
Unutilized credit facilities
4,848,128
100,114
137,466
34,417
5,120,125
17,323,451
759,785
1,138,332
4,821,570
24,043,138
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
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
120
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.
2023
2022
Funded
Government
33,692,949
36,844,301
Government agencies
14,314,437
7,396,217
Industry
7,375,009
8,629,212
Commercial
16,422,431
17,783,588
Services
47,846,075
52,688,115
Contracting
2,569,326
2,919,313
Real estate
17,562,657
19,137,077
Consumers
8,466,853
5,703,919
Other sectors
2,854,314
3,282,531
Total funded
151,104,051
154,384,273
Un-funded
Government institutions & semi government agencies
3,992,161
4,305,433
Services
8,974,327
7,688,954
Commercial and others
11,076,650
12,526,974
Total un-funded
24,043,138
24,521,361
Total
175,147,189
178,905,634
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
121
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.
2023
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
20,269,290
-
-
20,269,290
Sub-investment grade - ORR 5 to 7
5,245,462
2,356,188
-
7,601,650
Substandard - ORR 8
-
-
-
-
Doubtful - ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
25,514,752
2,356,188
-
27,870,940
Loss allowance
(43,475)
(19,006)
-
(62,481)
25,471,277
2,337,182
-
27,808,459
Accrued Interest
12,007
Carrying amount
27,820,466
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
122
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2023
Loans and advances to Customers
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
39,625,747
160,172
-
39,785,919
Sub-investment grade - ORR 5 to 7
32,075,349
19,093,407
-
51,168,756
Substandard - ORR 8
-
-
1,386,722
1,386,722
Doubtful - ORR 9
-
-
192,571
192,571
Loss - ORR 10
-
-
4,073,065
4,073,065
Total - Gross
71,701,096
19,253,579
5,652,358
96,607,033
Loss allowance
(183,563)
(1,779,601)
(3,977,594)
(5,940,758)
71,517,533
17,473,978
1,674,764
90,666,275
Accrued Interest
824,135
Carrying amount
91,490,410
2023
Investment Securities - Debt
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
23,724,920
256,466
-
23,981,386
Sub-investment grade - ORR 5 to 7
5,287,977
60,176
-
5,348,153
Substandard - ORR 8
-
-
-
-
Doubtful ORR 9
-
-
-
-
Loss - ORR 10
-
-
-
-
Total - Gross
29,012,897
316,642
-
29,329,539
Loss allowance
(51,808)
(5,352)
-
(57,160)
28,961,089
311,290
-
29,272,379
Accrued interest
381,724
Carrying amount
29,654,103
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
123
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(v) Credit Quality (continued)
2023
Loan Commitments and
financial Guarantees
Stage 1
Stage 2
Stage 3
Total
Investment grade - ORR 1 to 4
15,110,531
38,906
-
15,149,437
Sub-investment grade - ORR 5 to 7
7,343,806
1,348,303
-
8,692,109
Substandard - ORR 8
-
-
14,411
14,411
Doubtful ORR 9
-
-
26
26
Loss - ORR 10
-
-
187,155
187,155
Total - Gross
22,454,337
1,387,209
201,592
24,043,138
Loss allowance
(23,778)
(9,292)
(171,769)
(204,839)
Carrying amount
22,430,559
1,377,917
29,823
23,838,299
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
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
124
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 interest
406,361
Carrying amount
28,162,166
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
125
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
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 is 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 2023 is QAR 53,609 million (2022: QAR
56,455 million), stage 2 QAR 17,754 million (2022: QAR 17,978 million) and stage 3 QAR 2,661 million (2022: QAR 2,387
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 392 million (2022: QAR 40 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 2023
QAR ‘000s
cbq.qa
126
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
876 million (2022: QAR 459 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 employs 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 through-the-cycle (TTC) PD. In order the transform the TTC PD to point in time, a credit index
calculated over the passage of time 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 2023
QAR ‘000s
ANNUAL REPORT 2023
127
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 8 (Sub-standard), 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 2023
QAR ‘000s
cbq.qa
128
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 2023
QAR ‘000s
ANNUAL REPORT 2023
129
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.
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:
2023
2022
Average oil prices
$87/bbl
$81/bbl
GDP growth
2.4%
3.3%
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
130
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
For the purpose of estimation of ECL, following assumptions were used (continued):
2023
2022
Upside Case
15%
15%
Base Case
70%
70%
Downside Case
15%
15%
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.
2023
2022
100% Base Case, loss allowance would be higher/ (lower) by
(8,089)
(35,144)
100% Upside Case, loss allowance would be higher/ (lower) by
(114,368)
(201,373)
100% Downside Case, loss allowance would be higher/ (lower) by
153,932
365,377
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 2023
QAR ‘000s
ANNUAL REPORT 2023
131
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
2023
Movement in ECL
Stage 1
Stage 2
Stage 3
Total
Opening Balance as at 1 January 2023
Due from banks and balances with central banks
39,033
41,472
-
80,505
Loans and advances to customers - Opening
177,181
1,565,009
3,578,370
5,320,560
Restatement (Note 40)
-
-
346,231
346,231
Loans and advances to customers
177,181
1,565,009
3,924,601
5,666,791
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
4,145,434
6,128,639
ECL Charge for the Period (net)
Due from banks and balances with central banks
4,566
(22,466)
-
(17,900)
Loans and advances to customers
5,627
202,410
999,396
1,207,433
Investment Securities (Debt)
(4,153)
(1,645)
-
(5,798)
Loan Commitments and Financial Guarantees
(46,434)
(18,287)
(26,580)
(91,301)
(40,394)
160,012
972,816
1,092,434
Write offs / Transfer
Due from banks and balances with central banks
-
-
-
-
Loans and advances to customers
-
-
(875,604)
(875,604)
Investment Securities (Debt)
-
-
-
-
Loan Commitments and Financial Guarantees
-
-
(19,821)
(19,821)
-
-
(895,425)
(895,425)
Exchange differences
Due from banks and balances with central banks
(124)
-
-
(124)
Loans and advances to customers
755
12,182
(70,799)
(57,862)
Investment Securities (Debt)
(32)
-
-
(32)
Loan Commitments and Financial Guarantees
(893)
1,164
(2,663)
(2,392)
(294)
13,346
(73,462)
(60,410)
Closing Balance as at 31 December 2023
Due from banks and balances with central banks
43,475
19,006
-
62,481
Loans and Advances to Customers*
183,563
1,779,601
3,977,594
5,940,758
Investment Securities (Debt)
51,808
5,352
-
57,160
Loan Commitments and Financial Guarantees
23,778
9,292
171,769
204,839
302,624
1,813,251
4,149,363
6,265,238
*Allowance for impairment of loans and advances to customers includes QAR 557 million of interest in suspense
(2022: QAR 638 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
132
4. FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk (continued)
(viii) Inputs, assumptions and techniques used for estimating impairment (continued)
2022
Movement in ECL
Stage1
Stage2
Stage3
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)
197,080
150,236
(30,165)
71,498
1,327,496
1,368,829
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
(2,680)
524
2,923
(8,142)
(86,096)
(91,315)
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
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
133
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 Positive.
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 2023 is 264.4% (2022: 172.78%), as against the minimum requirement of 100% for the year ended 31
December 2023 (100% for 31 December 2022) as per QCB regulations.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
134
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
2023
Cash and balances
with central banks
8,631,193
3,122,328
-
-
3,122,328
-
-
5,508,865
Due from banks
20,525,334
8,840,993
3,855,432
7,665,600
20,362,025
163,309
-
-
Loans and advances
to customers
91,490,410
5,404,824
3,285,915
16,722,150
25,412,889
14,255,423
51,822,098
-
Investment
securities
30,762,358
1,294,190
1,652,969
5,195,484
8,142,643
13,652,715
7,847,676
1,119,324
Investment in
associates and a
joint arrangement
3,373,307
-
-
-
-
-
-
3,373,307
Property and
equipment and all
other assets
9,593,669
971,487
1,196,786
-
2,168,273
82,476
-
7,342,920
Total
164,376,271
19,633,822
9,991,102 29,583,234
59,208,158
28,153,923 59,669,774
17,344,416
Due to banks
18,805,257
5,616,753
5,429,247
3,749,502
14,795,502
4,001,910
-
7,845
Customer deposits
76,541,228
37,863,470
10,610,349
26,253,370
74,727,189
1,812,331
-
1,708
Debt securities
7,899,400
79,381
237,832
1,545,760
1,862,973
4,890,453
1,145,974
-
Other borrowings
26,266,888
215,115
1,441,225
6,730,423
8,386,763
17,862,136
-
17,989
Other liabilities
10,457,673
4,062,709
1,213,647
4,622,852
9,899,208
558,465
-
-
Total
139,970,446
47,837,428
18,932,300 42,901,907
109,671,635
29,125,295
1,145,974
27,542
Difference
24,405,825 (28,203,606)
(8,941,198) (13,318,673) (50,463,477)
(971,372) 58,523,800
17,316,874
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
135
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
2022 (Restated)
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
9,075,082
2,059,795
275,983
-
2,335,778
3,140,504
-
3,598,800
Total
168,902,409
27,550,899
4,897,166
19,671,554
52,119,619
37,526,682
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
17,071,747
244,246
1,890,156
3,706,679
5,841,081
11,202,320
-
28,346
Other liabilities
9,723,904
4,598,021
1,775,391
2,542,515
8,915,927
737,100
-
70,877
Total
144,731,473
65,301,538
25,587,492
26,906,855
117,795,885
25,671,267
1,157,027
107,294
Difference
24,170,936 (37,750,639) (20,690,326)
(7,235,301)
(65,676,266)
11,855,415
63,123,054
14,868,733
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
136
4. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
(iv) Maturity analysis (financial liabilities)
The table below summarizes the maturity profile of the Group’s financial liabilities at 31 December based on contractual
undiscounted repayment obligations.
2023
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
18,805,257 20,000,571
5,759,989
6,092,222
3,845,011
4,303,349
-
Customer deposits
76,541,228
79,231,869
39,159,381 10,992,483 27,202,834
1,877,171
-
Debt securities
7,899,400
8,677,577
79,381
238,824
1,598,370
5,531,292
1,229,710
Other borrowings
26,266,888
27,207,714
118,354
1,592,376
6,795,548
18,701,436
-
Total liabilities
129,512,773
135,117,731 45,117,105 18,915,905 39,441,763 30,413,248
1,229,710
2022 (Restated)
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
17,071,747 18,086,327
226,221
1,773,403 3,776,064 12,310,639
-
Total liabilities
135,007,569 138,531,793 57,648,747 23,142,025 24,580,965 32,223,067
936,989
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
137
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:
2023
Below 1 Year
Above 1 Year
Total
Unutilized credit facilities
4,022,986
1,097,139
5,120,125
Guarantees
10,930,278
7,992,735
18,923,013
Capital commitments
330,212
-
330,212
Total liabilities
15,283,476
9,089,874
24,373,350
2022
Below 1 Year
Above 1 Year
Total
Unutilized credit facilities
3,284,861
570,556
3,855,417
Guarantees
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
(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 2023
QAR ‘000s
cbq.qa
138
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
The principal risk to which financial instruments 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 financial instruments. Interest rate risk represents the most significant market risk exposure to the
Group’s 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 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 2023
QAR ‘000s
ANNUAL REPORT 2023
139
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk (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 is as follows:
Repricing in:
Effective
interest
rate %
2023
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
8,631,193
2,664,973
-
-
-
5,966,220
-
Due from banks
20,525,334
8,338,004
8,057,867
163,308
-
3,966,155
3.77%
Loans and
advances to
customers
91,490,410
39,245,876
44,425,407
2,713,190
6,149
5,099,788
8.01%
Investment
securities
30,762,358
3,993,123
7,474,399
1,113,490
17,073,091
1,108,255
5.28%
Investment in
associates and a
joint arrangement
3,373,307
-
-
-
-
3,373,307
-
Property and
equipment and all
other assets
9,593,669
-
-
-
-
9,593,669
-
164,376,271
54,241,976
59,957,673
3,989,988
17,079,240
29,107,394
-
Due to banks
(18,805,257)
(7,849,226)
(6,622,033)
(3,963,811)
-
(370,187)
5.00%
Customer deposits
(76,541,228)
(32,695,704)
(26,253,370)
(1,812,331)
-
(15,779,823)
3.92%
Debt securities
(7,899,400)
(311,813)
(1,538,993)
(4,867,825)
(1,161,434)
(19,335)
2.36%
Other borrowings
(26,266,888)
(14,548,095)
(8,900,600)
(2,711,843)
-
(106,350)
6.23%
Other liabilities
(10,457,673)
-
-
-
-
(10,457,673)
-
Equity
(24,405,825)
-
-
-
- (24,405,825)
-
(164,376,271) (55,404,838) (43,314,996) (13,355,810)
(1,161,434)
(51,139,193)
-
Interest rate
sensitivity gap
-
(1,162,862)
16,642,677 (9,365,822)
15,917,806 (22,031,799)
-
Cumulative
Interest rate
sensitivity gap
-
(1,162,862)
15,479,815
6,113,993
22,031,799
-
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
140
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk (continued)
A summary of the Group’s interest rate gap position is as follows:
Repricing in:
Effective
interest
rate %
2022 (Restated)
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
9,075,082
-
-
-
-
9,075,082
-
168,902,409
61,377,259 56,946,545
16,527,611
9,234,532 24,816,462
-
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
(17,071,747)
(1,979,053)
(3,911,158)
(11,104,125)
(77,411)
-
3.42%
Other liabilities
(9,723,904)
-
-
-
- (9,723,904)
-
Equity
(24,170,936)
-
-
-
- (24,170,936)
-
(168,902,409) (66,828,451) (29,303,274) (19,815,564)
(961,438) (51,993,682)
-
Interest rate
sensitivity gap
-
(5,451,192)
27,643,271 (3,287,953)
8,273,094 (27,177,220)
-
Cumulative Interest
rate sensitivity gap
-
(5,451,192)
22,192,079
18,904,126
27,177,220
-
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
141
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk (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
2023
At 31 December
18,615
(18,615)
Average for the year
42,660
(42,660)
2022
At 31 December
62,644
(62,644)
Average for the year
51,971
(51,971)
Sensitivity to reported Fair value reserve in equity of interest rate
movements
25 bp parallel
increase
25 bp parallel
decrease
2023
At 31 December
5,056
(5,056)
Average for the year
4,794
(4,794)
2022
At 31 December
757
(757)
Average for the year
464
(464)
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 consolidated statement of income; 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 2023
QAR ‘000s
cbq.qa
142
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(ii) Exposure to interest rate risk (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 were 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.
During the year 2023, the Group has completed its transition plan for the remaining IBOR exposure outstanding ast 31
December 2022, which was indexed to US dollar LIBOR to SOFR reference rate.
(iii) Exposure to other market risks - non trading portfolios rate risk
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:
2023
2022
Pound Sterling
(66,606)
(22,525)
Euro
(80,006)
(172,571)
USD
(35,824,664)
(35,650,200)
TRY
744,443
941,442
Other currencies
3,217,732
2,863,401
Increase (decrease) in
profit or loss
Increase (decrease) in
fair value reserve
5% increase in currency exchange rate
2023
2022
2023
2022
Pound Sterling
(3,330)
(1,126)
-
-
Euro
(4,000)
(8,629)
-
-
USD
(1,791,233)
(1,782,510)
-
-
TRY
37,222
47,072
-
4,031
Other currencies
160,887
143,710
-
-
Open exchange position in other currencies represents Group’s investment in associates and a joint arrangement
denominated in OMR and AED.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
143
4. FINANCIAL RISK MANAGEMENT (continued)
(d) Market risk (continued)
(iii) Exposure to other market risks - non trading portfolios rate risk (continued)
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 2023 would
have increased equity by QAR 99 million (2022: QAR 126 million). An equivalent decrease would have resulted in an
equivalent but opposite impact.
The Group is also exposed to equity price risk and the sensitivity analysis there of is as follows:
2023
2022
Increase / (decrease) in other comprehensive income:
Qatar Exchange
21,711
17,267
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 2023
QAR ‘000s
cbq.qa
144
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 calculations.
The Group’s regulatory capital position under Basel III QCB regulations as at 31 December was as follows:
Basel III
2023
Basel III
2022
Common Equity Tier 1 (CET 1) Capital
12,922,360
14,534,849
Additional Tier 1 Capital
4,141,663
4,983,528
Tier 1 Capital
17,064,023
19,518,377
Tier 2 Capital
1,036,015
2,171,251
Total Eligible Capital
18,100,038
21,689,628
Risk Weighted Assets for Credit Risk
110,105,151
115,460,043
Risk Weighted Assets for Market Risk
2,274,999
1,901,291
Risk Weighted Assets for Operational Risk
8,894,329
8,114,031
Total Risk Weighted Assets
121,274,479
125,475,365
2023
2022
(Previously
reported)
CET 1 Ratio
10.6%
11.6%
Tier 1 Capital Ratio
14.1%
15.6%
Total Capital Ratio
14.9%
17.3%
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
145
4. FINANCIAL RISK MANAGEMENT (continued)
(f) Capital management (continued)
Regulatory capital (continued)
The minimum requirements for Capital Adequacy Ratio under Basel III for the Group as per QCB regulations are as follows:
Due to the restatements related to the Employee phantom scheme shares, as described in Note 40, the CET 1 ratio, Tier 1
ratio and total capital ratio for the year ended 31 December 2022 were restated to 10.3%, 14.2% and 16.0% respectively.
Without
Capital
Conservation
Buffer
Capital
conservation
buffer
Additional
DSIB
charge
ICAAP Capital
Charge
Total
Minimum limit for CET 1 ratio
6.0%
2.5%
0.5%
0.0%
9.0%
Minimum limit for Tier 1 capital ratio
8.0%
2.5%
0.5%
0.0%
11.0%
Minimum limit for Total capital ratio
10.0%
2.5%
0.5%
1.1%
14.1%
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) 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).
(ii) 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.
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.
(iii) 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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
146
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(a) Key sources of estimation uncertainty (continued)
(iv) 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”
(b) Critical accounting judgements in applying the Group’s accounting policies
(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 2023
QAR ‘000s
ANNUAL REPORT 2023
147
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
2023
Derivative assets
-
882,633
-
882,633
Investment securities
3,355,033
4,069,445
100,284
7,524,762
3,355,033
4,952,078
100,284
8,407,395
Derivative liabilities
-
699,226
-
699,226
-
699,226
-
699,226
Level 1
Level 2
Level 3
Carrying
amount
2022
Derivative assets
-
936,075
-
936,075
Investment securities
3,181,459
5,558,631
81,628
8,821,718
3,181,459
6,494,706
81,628
9,757,793
Derivative liabilities
-
826,234
-
826,234
-
826,234
-
826,234
There have been no transfers between level 1 and level 2
Reconciliation of level 3 investments are as follows:
2023
2022
Balance at 1 January
81,628
25,555
Cost movement
(443)
57,068
Profit and loss movement
19,099
(995)
Balance at 31 December
100,284
81,628
(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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
148
5. USE OF ESTIMATES AND JUDGMENTS (continued)
(b) Critical accounting judgements in applying the Group’s accounting policies (continued)
(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) 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.
(iv) 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).
(v) 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.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
149
6. OPERATING SEGMENTS
The Group organises and manages its operations through four main business segments, as described below, which are the
Group’s strategic business units. For each strategic business units, the Group management committee reviews internal
management reports on at least a quarterly basis. The strategic business units offer different products and services and are
managed separately because they require different strategies.
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. International:
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.
Investment in associates includes strategic investments in the National Bank of Oman in the Sultanate of Oman and
United Arab Bank in the United Arab Emirates.
All Associates and joint arrangement Companies are accounted for under the equity method.
4. Unallocated, Intra - group transactions and others
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.
Others include subsidiaries and joint arrangement operating in Qatar.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
150
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:
2023
Qatar Operations
Wholesale
Banking
Retail
Banking International
Unallocated
and Intra-
group
transactions
Total
Net interest income
2,494,069
1,045,346
339,075
(11,149)
3,867,341
Net fee, commission and other income
516,217
666,598
514,167
(74,830)
1,622,152
Segmental revenue
3,010,286
1,711,944
853,242
(85,979)
5,489,493
Net Impairment losses on investment
securities
5,846
-
(48)
-
5,798
Net impairment loss on loans and
advances to customers and other
financial assets
(699,523)
(153,291)
(28,696)
-
(881,510)
Segmental profit
1,847,147
1,041,563
83,612
(256,265)
2,716,057
Share of results of associates and a joint
arrangement
-
-
292,624
1,546
294,170
Net profit for the year
1,847,147
1,041,563
376,236
(254,719)
3,010,227
Other information
Loans and advances to customers
76,291,644
10,907,075
4,291,691
- 91,490,410
Investments in associates and a joint
arrangement
-
-
3,365,902
7,405
3,373,307
Assets (other than above)
59,378,428
2,138,462
3,647,291
4,348,373
69,512,554
164,376,271
Customer deposits
48,837,273
24,947,583
2,991,591
(235,219)
76,541,228
Liabilities (other than above)
55,629,557
647,635
3,948,439
3,203,587
63,429,218
139,970,446
Contingent items
20,027,281
981,463
3,034,394
-
24,043,138
Intra-group transactions are eliminated from this segmental information (Assets: QAR 3,919 million, Liabilities: QAR 1,119
million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
151
6. OPERATING SEGMENTS (continued)
(a) By operating segment (continued)
2022 (Restated)
Qatar Operations
Wholesale
Banking Retail Banking
International
Unallocated
and Intra-
group
transactions
Total
Net interest income
2,619,083
935,202
416,268
(7,499)
3,963,054
Net fee, commission and other income
418,463
662,856
138,579
111,047
1,330,945
Segmental revenue
3,037,546
1,598,058
554,847
103,548
5,293,999
Net Impairment reversal on investment
securities
(11,480)
-
58
-
(11,422)
Net impairment loss 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
31,464
220,684
2,588,812
Share of results of associates and a joint
arrangement
-
-
220,380
1,916
222,296
Net profit for the year
1,318,791
1,017,873
251,844
222,600
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
-
-
3,094,395
7,358
3,101,753
Assets (other than above)
56,799,132
2,148,488
4,057,057
4,779,797
67,784,474
168,902,409
Customer deposits
51,612,802
26,019,560
6,169,806
(634,676)
83,167,492
Liabilities (other than above)
53,356,068
2,373,380
3,983,249
1,851,284
61,563,981
144,731,473
Contingent items
18,925,661
2,302,615
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 2023
QAR ‘000s
cbq.qa
152
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
2023
Cash and balances with
central banks
7,408,865
-
1,222,328
-
-
-
8,631,193
Due from banks
6,735,353
2,311,567
4,045,944
2,528,696
2,575,155
2,328,619
20,525,334
Loans and advances to
customers
82,161,078
822,411
7,260,658
729,507
-
516,756
91,490,410
Investment securities
25,442,815
1,889,439
2,493,898
413,437
202,143
320,626
30,762,358
Investment in associates
and a joint arrangement
7,405
3,365,902
-
-
-
-
3,373,307
Property and equipment
and all other assets
8,786,696
-
806,973
-
-
-
9,593,669
Total assets
130,542,212
8,389,319 15,829,801
3,671,640
2,777,298
3,166,001 164,376,271
Due to banks
912,428
2,611,578
3,864,725
9,126,164
471,214
1,819,148
18,805,257
Customer deposits
65,691,848
2,834,043
3,034,339
1,557,162
193,227
3,230,609
76,541,228
Debt securities
-
-
774,704
7,124,696
-
-
7,899,400
Other borrowings
3,423,024
8,389,268
432,481
4,921,390
579,049
8,521,676
26,266,888
Other liabilities
10,014,067
-
443,606
-
-
-
10,457,673
Equity
23,406,876
-
998,949
-
-
-
24,405,825
Total liabilities and
equity
103,448,243 13,834,889 9,548,804 22,729,412
1,243,490
13,571,433 164,376,271
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
153
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 2023
Net interest income
4,666,925
(347,609)
529,993
(670,740)
(37,981)
(273,247)
3,867,341
Net fee, commission and
other income
905,682
75,243
542,822
53,096
5,021
40,288
1,622,152
Net operating income
5,572,607
(272,366)
1,072,815
(617,644)
(32,960) (232,959) 5,489,493
Staff cost
(613,377)
-
(158,004)
-
-
-
(771,381)
Depreciation
(221,770)
-
(15,364)
-
-
-
(237,134)
Amortization of intangible
assets
(46,268)
-
(20,287)
-
-
-
(66,555)
Impairment loss on
investment securities
5,846
-
(48)
-
-
-
5,798
Net impairment loss on
loans and advances to
customers
(963,931)
-
(26,780)
-
-
-
(990,711)
Net impairment losses on
other financial assets
111,117
-
(1,916)
-
-
-
109,201
Other Provision
(39,405)
-
(2,274)
-
-
-
(41,679)
Other expenses
(233,333)
-
(132,300)
-
-
(121)
(365,754)
Profit before net monetary
loss and share of results of
associates and a joint
arrangement
3,571,486 (272,366)
715,842 (617,644)
(32,960) (233,080)
3,131,278
Net monetary losses due
to hyperinflation
-
-
(334,983)
-
-
-
(334,983)
Share of results of
associates and a joint
arrangement
1,546
292,624
-
-
-
-
294,170
Profit for the year
before tax
3,573,032
20,258
380,859
(617,644)
(32,960) (233,080) 3,090,465
Income tax expenses
(2,559)
-
(77,679)
-
-
-
(80,238)
Net profit for the year
3,570,473
20,258
303,180
(617,644)
(32,960) (233,080) 3,010,227
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
154
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
2022 (Restated)
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
8,292,612
-
782,470
-
-
-
9,075,082
Total assets
126,902,199
7,666,588 15,834,880
8,775,593
1,895,614
7,827,535 168,902,409
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
3,008,981
4,654,475
526,785
2,132,845
3,166,568
3,582,093
17,071,747
Other liabilities
9,188,498
-
534,344
-
-
1,062
9,723,904
Equity
23,201,613
-
969,323
-
-
-
24,170,936
Total liabilities and equity
102,599,831
7,841,449 12,907,070
25,559,741
3,902,256 16,092,062 168,902,409
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
155
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
3,823,917
41,665
705,496 (406,632)
(13,227)
(188,165) 3,963,054
Net fee, commission and
other income
1,282,954
(23,350)
174,787
(77,229)
(527)
(25,690)
1,330,945
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)
Impairment loss on
investment securities
(11,480)
-
58
-
-
-
(11,422)
Net impairment loss 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 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 2023
QAR ‘000s
cbq.qa
156
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 or loss
Fair value through other
comprehensive income
2023
Debt
instruments
Equity
instruments
Debt
instruments
Equity
instruments
Amortised
Cost
Total
carrying
amount
Cash and balances with
central banks
-
-
-
-
8,631,193
8,631,193
Due from banks
-
-
-
-
20,525,334
20,525,334
Loans and advances to
customers
-
-
-
-
91,490,410
91,490,410
Investment securities
1,920,381
113,236
4,555,187
995,019
23,178,535
30,762,358
1,920,381
113,236
4,555,187
995,019 143,825,472 151,409,295
Due to banks
-
-
-
-
18,805,257
18,805,257
Customer deposits
-
-
-
-
76,541,228
76,541,228
Debt securities
-
-
-
-
7,899,400
7,899,400
Other borrowings
-
-
-
-
26,266,888
26,266,888
-
-
-
- 129,512,773 129,512,773
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
157
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
2022 (Restated)
Debt
instruments
Equity
instruments
Debt
instruments
Equity
instruments
Amortised
Cost
Total carrying
amount
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
-
-
-
-
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
2,407,398
118,249
4,910,391
1,554,844
147,734,692
156,725,574
Due to banks
-
-
-
-
24,054,014
24,054,014
Customer deposits
-
-
-
-
83,167,492
83,167,492
Debt securities
-
-
-
-
10,714,316
10,714,316
Other borrowings
-
-
-
-
17,071,747
17,071,747
-
-
-
- 135,007,569 135,007,569
Management considers that the carrying amounts of Group’s financial assets and liabilities do not materially differ from their
fair values as at the year-end.
8. CASH AND BALANCES WITH CENTRAL BANKS
2023
2022
Cash
1,336,061
2,681,299
Cash reserve with central banks *
4,630,159
4,641,919
Other balances with central banks
2,664,953
707,085
8,631,173
8,030,303
Accrued interest
20
31
8,631,193
8,030,334
* 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 2023
QAR ‘000s
cbq.qa
158
9. DUE FROM BANKS
2023
2022
Current accounts
4,537,748
10,755,276
Placements
10,002,791
5,790,113
Loans to banks
6,035,289
4,368,340
20,575,828
20,913,729
Accrued interest
11,987
10,574
Allowance for impairment of due from bank
(62,481)
(80,505)
20,525,334
20,843,798
10. LOANS AND ADVANCES TO CUSTOMERS
(a) By type
2023
2022
Loans
84,769,585
89,950,630
Overdrafts
6,628,593
8,151,876
Bills discounted
111,491
112,004
Bankers acceptances
5,099,788
4,305,125
96,609,457
102,519,635
Deferred profit
(2,424)
(3,088)
96,607,033
102,516,547
Accrued interest
824,135
820,195
Allowance for impairment of loans and advances to customers**
(3,977,594)
(3,578,370)
ECL on loans and advances to customers
(1,963,164)
(1,742,190)
Net loans and advances to customers *
91,490,410
98,016,182
*The aggregate amount of non-performing loans and advances to customers amounted QAR 5,652 million which
represents 5.9% of total loans and advances to customers (2022: QAR 5,046 million 4.9% of total loans and advances to
customers).
**Allowance for impairment of loans and advances to customers includes QAR 557 million of interest in suspense (2022:
QAR 638 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
159
10. LOANS AND ADVANCES TO CUSTOMERS (continued)
(b) By sector
2023
Loans
Overdrafts
Bills
discounted
Bankers
acceptances
Total
Government and related agencies
11,539,444
3,060,038
-
-
14,599,482
Non-banking financial institutions
559,386
36,662
-
-
596,048
Industry
6,992,252
19,039
-
8,445
7,019,736
Commercial
13,689,966
417,620
13,681
1,973,814
16,095,081
Services
21,487,421
925,977
19,332
2,677,662
25,110,392
Contracting
2,375,255
493,050
78,478
407,934
3,354,717
Real estate
19,969,130
103,764
-
-
20,072,894
Personal
7,461,824
1,555,976
-
-
9,017,800
Others
694,908
16,466
-
31,933
743,307
84,769,586
6,628,592
111,491
5,099,788
96,609,457
Accrued interest
824,135
Less: Deferred profit
(2,424)
Allowance for impairment of loans and advances to customers
(3,977,594)
ECL on loans and advances to customers
(1,963,164)
(5,119,047)
Net loans and advances to customers
91,490,410
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
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
160
10. LOANS AND ADVANCES TO CUSTOMERS (continued)
(c) Movement in allowance for impairment of loans and advances to customers
2023
2022
Balance at 1 January
5,320,560
4,662,053
Restatement (Note 40)
346,231
-
Balance at 1 January - Restated
5,666,791
4,662,053
Allowance made during the year
1,494,909
1,348,214
Recoveries / reversals during the year
(287,476)
(139,461)
Net allowance for impairment during the year *
1,207,433
1,208,753
Written off / transferred during the year
(875,604)
(458,600)
Exchange differences
(57,862)
(91,646)
Balance at 31 December
5,940,758
5,320,560
*This includes net interest suspended during the year QAR 185 million (2022: QAR 133.8 million) as per QCB regulations.
Net impairment losses on loans and advances to customers
2023
2022
Gross allowance made during the year
1,494,909
1,348,214
Less: Recoveries / reversals during the year
(287,476)
(139,461)
1,207,433
1,208,753
Less: Interest suspended during the year
(185,140)
(133,773)
Less: Recoveries on previously written off loans
(31,582)
(87,371)
990,711
987,609
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
161
11. INVESTMENT SECURITIES
2023
2022
Fair value through other comprehensive income (FVOCI)
5,511,025
6,323,095
Fair value through profit & loss (FVTPL)
2,013,737
2,498,623
Amortised cost (AC)
22,855,872
20,607,181
30,380,634
29,428,899
Accrued interest
381,724
406,361
30,762,358
29,835,260
The carrying value of investment securities pledged under repurchase agreements (REPO) is QAR 9,765 million (2022:
QAR 10,317 million).
Expected credit loss of QAR 8.7 million (2022: QAR9.8 million), pertaining to FVOCI debt securities is part of fair value
reserve in equity.
(a) Fair value through other comprehensive income:
2023
Quoted
Unquoted
Total
Equities
989,820
5,199
995,019
State of Qatar debt securities
2,809,396
-
2,809,396
Debt and other securities*
1,706,610
-
1,706,610
Total
5,505,826
5,199
5,511,025
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
* Fixed rate securities and floating rate securities amounted to QAR 2,552 million and QAR 1,964 million respectively (2022:
QAR 1,387 million and QAR 264 million respectively).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
162
11. INVESTMENT SECURITIES (continued)
(b) Fair value through profit & loss
2023
Quoted
Unquoted
Total
Equities
-
88,565
88,565
State of Qatar debt securities
50,000
-
50,000
Debt and other securities
1,304,422
546,079
1,850,501
Investment funds
9,793
14,878
24,671
Total
1,364,215
649,522
2,013,737
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
(c) Amortised Cost
2023
By Issuer
Quoted
Unquoted
Total
State of Qatar debt securities
19,307,097
-
19,307,097
Debt and other securities
3,538,273
10,502
3,548,775
Total
22,845,370
10,502
22,855,872
2023
By Interest Rate
Quoted
Unquoted
Total
Fixed Rate Securities
22,786,827
10,502
22,797,329
Floating Rate Securities
58,543
-
58,543
Total
22,845,370
10,502
22,855,872
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
163
11. INVESTMENT SECURITIES (continued)
(c) Amortised Cost (continued)
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
12. INVESTMENT IN ASSOCIATES AND A JOINT ARRANGEMENT
The Group’s investment in associates and a joint arrangement are as follows:
Ownership %
Price per share
(QAR)
Name of the Entity
Classification
Country
Activities
2023
2022
National Bank of Oman
SAOG (‘NBO’)
Associate
Oman
Banking
34.9%
34.9%
2.65
United Arab Bank PJSC
(‘UAB’)
Associate
UAE
Banking
40.0%
40.0%
1.29
Massoun Insurance
Services L.L.C
Joint venture
Qatar
Insurance
brokerage
50.0%
50.0%
Not Listed
2023
2022
Total assets
63,066,681
54,549,121
Total liabilities
54,419,279
46,999,911
Operating income
1,950,001
1,620,304
Net profit
801,496
609,055
Total comprehensive income
849,735
459,236
Share of results
292,624
220,380
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
164
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 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
Balance at 1 January 2023
2,168,264
578,870
108,667
1,486,757
32,209
525,877 4,900,644
Additions / transfers
(9,675)
63,074
2,225
125,486
33,508
32,483
247,101
Revaluation on land & buildings
37,235
-
-
-
-
-
37,235
Disposals
(204)
(34,943)
(1,157)
(2,605)
(3,747)
-
(42,656)
Exchange differences
(6,113)
(1,029)
4,050
(2,475)
(5,774)
-
(11,341)
Balance at 31 December 2023
2,189,507
605,972
113,785
1,607,163
56,196
558,360 5,130,983
Accumulated depreciation
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
-
(3,912)
-
-
(153)
-
(4,065)
Exchange differences
(2,676)
(2,814)
(4,202)
(11,384)
(2,932)
-
(24,008)
Balance at 31 December 2022
204,094
233,438
92,230
1,315,837
4,685
- 1,850,284
Balance at 1 January 2023
204,094
233,438
92,230
1,315,837
4,685
- 1,850,284
Depreciation for the year
28,185
115,371
2,565
84,429
6,584
-
237,134
Disposals
-
(9,193)
(1,008)
(2,260)
(998)
-
(13,459)
Exchange differences
(5,952)
(2,722)
547
5,454
(3,102)
-
(5,775)
Balance at 31 December 2023
226,327
336,894
94,334 1,403,460
7,169
- 2,068,184
Net carrying amounts
Balance at 31 December 2022
1,964,170
345,432
16,437
170,920
27,524
525,877 3,050,360
Balance at 31 December 2023
1,963,180
269,078
19,451
203,703
49,027
558,360 3,062,799
Right of use asset pertains to the following:
2023
2022
Land and buildings
269,078
345,432
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
165
14. INTANGIBLE ASSETS
Goodwill
Brand
Customer
relationship
Core
deposit
Internally
developed
software
Total
Cost
Balance at 1 January 2022
20,648
36,723
318,351
73,295
40,106
489,123
Acquisitions
-
326
-
-
22,940
23,266
Impairment during the year (Note 32)
(3,678)
-
-
-
-
(3,678)
Exchange differences
(6,965)
(1,882)
23,357
5,603
(601)
19,512
Balance at 31 December 2022
10,005
35,167
341,708
78,898
62,445
528,223
Balance at 1 January 2023
10,005
35,167
341,708
78,898
62,445
528,223
Acquisitions
-
-
-
-
24,266
24,266
Impairment during the year (Note 32)
(5,104)
-
-
-
(39)
(5,143)
Exchange differences
(2,367)
(2,072)
29,227
4,333
(8,967)
20,154
Balance at 31 December 2023
2,534
33,095
370,935
83,231
77,705
567,500
Amortisation
Balance at 1 January 2022
-
24,679
297,149
66,584
25,336
413,748
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
-
21,316
334,042
74,908
31,917
462,183
Balance at 1 January 2023
-
21,316
334,042
74,908
31,917
462,183
Amortisation during the year
-
3,663
36,893
8,323
17,676
66,555
Exchange differences
-
(4,781)
-
-
(18,867)
(23,648)
Balance at 31 December 2023
-
20,198
370,935
83,231
30,726 505,090
Net carrying amounts
Balance at 31 December 2022
10,005
13,851
7,666
3,990
30,528
66,040
Balance at 31 December 2023
2,534
12,897
-
-
46,979
62,410
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 35.9%
(2022: 24.7%) and a terminal growth rate of 2.5% (2022: 2.5%) were used to estimate the recoverable amount of
Alternatifbank.
The Group performed its annual impairment test in accordance with its accounting policy and performed a sensitivity
analysis of the underlying assumptions used in the value-in-use calculations. The recoverable amounts of cash-generating
units were higher than the carrying amounts.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
166
15. OTHER ASSETS
2023
2022
(Restated)
Accrued income
6,414
20,782
Prepaid expenses
75,224
78,589
Accounts receivable
1,014,763
742,119
Repossessed collateral*
3,920,983
3,563,808
Positive fair value of derivatives (note 37)
882,633
936,075
Clearing cheques
163,512
334,897
Deferred tax assets (note 33)
34,524
19,258
Others
370,407
263,154
6,468,460
5,958,682
*This represents the value of the properties acquired in settlement of debts.
16. DUE TO BANKS
2023
2022
Balances due to central banks
1,217,258
961,587
Current accounts
363,091
463,275
Placement with banks
8,420,005
13,297,694
Repurchase agreements
8,720,837
9,264,655
Accrued interest
84,066
66,803
Total
18,805,257
24,054,014
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
167
17. CUSTOMER DEPOSITS
2023
2022
Current and call deposits
21,437,537
26,003,197
Saving deposits
5,470,069
5,948,246
Time deposits
48,961,806
50,732,362
Accrued interest
671,816
483,687
Total
76,541,228
83,167,492
2023
2022
Government
7,112,801
6,212,452
Government and semi government agencies
16,953,418
17,031,685
Individuals
21,570,904
23,217,031
Corporate
21,794,349
28,545,961
Non-banking financial institutions
8,437,940
7,676,676
75,869,412
82,683,805
Accrued interest
671,816
483,687
76,541,228
83,167,492
18. DEBT SECURITIES
2023
2022
EMTN unsecured Programme – Senior unsecured notes *
6,902,490
9,827,802
Senior Notes*
48,176
111,456
Subordinated Notes *
726,577
727,437
Others#
172,006
-
Accrued interest
50,151
47,621
Total
7,899,400
10,714,316
* The following table provides the breakdown of the Debt Securities as at close of 31 December 2023.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
168
18. DEBT SECURITIES (continued)
Instrument
Issuer
Issued amount
Issued on Maturity
Coupon
EMTN - Senior notes
CBQ Finance Ltd
USD 36 million *
Feb-19
Feb-24
SOFR + 1.95%
CBQ Finance Ltd
USD 10 million *
Feb-20
Feb-25
SOFR + 1.24%
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
CHF 185 million *
Nov-20
Nov-24
Fixed Rate 0.745%
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
HKD 77 million *
Aug-21
Aug-24
HIBOR + 0.48%
CBQ Finance Ltd
NZD 36 million *
Aug-21
Aug-31
BKBM + 1.38%
CBQ Finance Ltd
NZD 32 million *
Sep-21
Sep-31
BKBM + 1.36%
CBQ Finance Ltd
QAR 429 million *
Mar-23
Mar-26
Fixed Rate 5.85%
Subordinated Notes
Alternatifbank
USD 200 million
Sep-23
Apr-26
Fixed Rate 10.5%
Senior Notes
Alternatifbank
TL 104 million
Sep-23
Mar-24
Fixed Rate 19.3%
Alternatifbank
TL 84 million
Oct-23
Apr-24
Fixed Rate 20.5%
Alternatifbank
TL 119 million
Nov-23
May-24
Fixed Rate 24.0%
Alternatifbank
TL 83 million
Nov-23
May-24
Fixed Rate 22.0%
* Issued for and Guaranteed by the Bank
# Others include certificate of deposits issued by the Bank.
Movement in debt securities are analysed as follows:
2023
2022
Balance at 1 January
10,714,316
15,285,788
Additions
662,601
1,050,165
Repayments
(3,569,450)
(5,342,627)
Amortization of discount and transaction cost
6,186
10,472
Accrued interest
54,211
(6,179)
Exchange difference
31,536
(283,303)
Balance at 31 December
7,899,400
10,714,316
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
169
18. DEBT SECURITIES (continued)
The table below shows the maturity profile of debt securities:
2023
2022
Up to 1 year
1,885,449
3,646,191
Between 1 and 3 years
2,159,982
1,486,679
Over 3 years
3,853,969
5,581,446
Total
7,899,400
10,714,316
19. OTHER BORROWINGS
2023
2022
(Restated)
Bilateral loans
7,440,611
2,227,400
Syndicated loans
12,695,688
8,365,027
Others
5,694,667
6,207,500
Accrued interest
435,922
271,820
Total
26,266,888
17,071,747
Movements in other borrowings are as follows:
2023
2022
Balance at 1 January
17,106,327
15,718,753
Restatement (Note 40)
-
948,220
Balance at 1 January - Restated
17,106,327
16,666,973
Additions
15,324,265
8,333,786
Repayments
(5,391,521)
(7,374,297)
Amortization of discount and transaction cost
102,494
22,867
Accrued interest
164,102
179,553
Exchange difference
(1,038,779)
(757,135)
Balance at 31 December
26,266,888
17,071,747
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
170
19. OTHER BORROWINGS (continued)
The table below shows the maturity profile of other borrowings:
2023
2022
Up to 1 year
8,509,196
5,785,722
Between 1 and 3 years
4,376,702
6,772,551
Over 3 years
13,380,990
4,513,474
Total
26,266,888
17,071,747
20. OTHER LIABILITIES
2023
2022
Accrued expense payable
389,217
181,791
Other provisions (Note i)
179,774
177,417
Negative fair value of derivatives (Note 37)
699,226
826,234
Unearned income
177,918
188,426
Cash margins
616,660
751,555
Accounts payable
803,411
634,388
Board of Directors’ remuneration and fee (Note 39)
25,500
18,500
Provision for sports and social activities support fund (“Daam”) (Note 23)
75,256
70,278
Dividend payable
21,458
18,965
Managers’ cheque and payment order
52,087
65,687
Unclaimed balances
24,150
14,384
Due for trade acceptances
5,099,788
4,305,123
Lease liabilities (Note ii)
263,419
366,704
Employees’ benefit liability (Note 31 and Note iii)
101,097
85,276
Income tax payable
14,119
16,191
Others
1,709,754
1,684,632
Net impairment losses on loan commitments and financial guarantees
204,839
318,353
Total
10,457,673
9,723,904
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
171
20. OTHER LIABILITIES (continued)
(i) Other provisions
Provident
fund (a)
Pension
fund (b)
Total
2023
Total
2022
Balance at 1 January
176,477
940
177,417
182,902
Provision made during the year (note 31)
22,708
12,187
34,895
21,455
Earnings of the fund
4,647
-
4,647
4,855
Provident fund – staff contribution
3,672
6,213
9,885
8,546
Transferred to state retirement fund authority
-
(18,157)
(18,157)
(12,324)
Payment during the year
(22,726)
-
(22,726)
(25,211)
Exchange difference
(6,187)
-
(6,187)
(2,806)
Balance at 31 December
178,591
1,183
179,774
177,417
(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:
2023
2022
Up to 1 year
134,834
137,568
Above 1 year
128,585
229,136
Total
263,419
366,704
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
172
20. OTHER LIABILITIES (continued)
(iii) Employees’ benefit liability
The Bank has granted share appreciation rights to employees including senior management, in lieu of deferred bonus.
Share appreciation 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 share appreciation rights do not provide any entitlement to receive Bank shares,
voting rights or dividends associated with them. The fair value was estimated using the Black Scholes model, considering
the terms and conditions upon which the performance rights were granted. Share appreciation rights will be settled in cash.
a. The following table summarises information about share appreciation rights outstanding as at 31 December 2023:
Year
Outstanding Options
2018
11,691,117
2020
89,464,769
2021
28,870,657
2022
12,428,331
b. Movement during the year as follows:
2023
2022
Number of
options
Weighted
average strike
price
Number of
options
Weighted
average strike
price
At 1 January
201,958,907
5.38
201,424,907
4.44
Granted during the year
30,474,582
5.67
53,990,867
7.48
Exercised during the year
(35,426,306)
3.60
(53,456,867)
7.48
Forfeited/cancelled/expired during the year
(54,552,309)
6.06
-
-
At 31 December
142,454,874
5.69
201,958,907
5.38
2023
2022
Max
Min
Max
Min
Expected volatility (%)
28.14%
23.69%
31.33%
26.18%
Dividend yield (%)
4.69%
5.08%
10.40%
7.29%
Risk - free int. rate (%)
5.89%
5.98%
4.61%
3.90%
Vesting period
3 years
3 years
Share price (QAR)
6.2
5
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
173
21. EQUITY
(a) Share capital
The issued, subscribed and paid up share capital of the Bank is QAR 4,047,253,750 (2022: QAR 4,047,253,750) divided into
4,047,253,750 (2022: 4,047,253,750) ordinary shares of QAR 1 each (2022: QAR 1 each).
2023
2022
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 2023, the authorized share capital comprised 4,047,254 thousand ordinary share (2022: 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 9,777 million (2022: QAR 9,764 million) and QAR 247
million (2022: QAR 105 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 2.5% 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 Nil (2022: QAR 143 million) was transferred to the risk reserve account.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
174
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
Fair value
Through Other
Comprehensive
Income
Associates
Total
Balance as at 1 January 2023
(212,451)
(51,505)
(263,956)
- on equity securities
(153,524)
-
(153,524)
- on debt securities
(27,466)
-
(27,466)
Net amount transferred to statement of income
(1,381)
-
(1,381)
Share of other comprehensive income of investment in
associates and a joint arrangement
-
18,576
18,576
Net movement during the year
(182,371)
18,576
(163,795)
Transfer to retained earnings upon disposal of FVOCI equity
investments
28,469
-
28,469
Balance as at 31 December 2023
(366,353)
(32,929)
(399,282)
Balance as at 1 January 2022
323,669
8,932
332,601
- on equity securities
424,246
-
424,246
- on debt securities
(782,712)
-
(782,712)
Net amount transferred to statement of income
(39)
-
(39)
Share of other comprehensive income of investment in
associates and a joint arrangement
-
(60,437)
(60,437)
Net movement during the year
(358,505)
(60,437)
(418,942)
Transfer to retained earnings upon disposal of FVOCI equity
investments
(177,615)
-
(177,615)
Balance as at 31 December 2022
(212,451)
(51,505)
(263,956)
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
175
21. EQUITY (continued)
(f) Cash flow hedge reserve
Cash flow hedge reserve, which comprises the portion of the gain or loss on a hedging instrument in a cash flow hedge that
is determined to be an effective hedge.
2023
2022
Balance as at 1 January
(103,079)
59,629
Transfer to consolidated statement of income
205,786
-
Net movement in effective portion of Cash Flow hedges
(257,768)
(162,708)
Net movement during the year
(51,982)
(162,708)
Balance as at 31 December
(155,061)
(103,079)
(g) Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of
foreign operations.
(h) 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:
2023
2022
Balance as at 1 January
884,977
684,027
Share of result of associates and a joint arrangement
294,170
222,296
Dividend from associates and a joint arrangement
(41,193)
(21,346)
Net movement
252,977
200,950
Balance as at 31 December
1,137,954
884,977
(i) Proposed dividend
The Board of Directors has proposed a cash dividend of 25% for the year 2023 (2022: 25% cash dividend). This proposal
is subject to approval at the Annual General Assembly.
(j) Dividends
A cash dividend of 25% for the year 2022 (2021: 16% cash dividend), was approved at the Annual General Assembly held
on 15 March 2023 and distributed to shareholders.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
176
21. EQUITY (continued)
(k) 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.
(l) Employee incentive phantom scheme shares
Employee incentive phantom scheme shares represents the shares held by SPVs. These entities hold employee incentive
phantom scheme shares on behalf of the Bank in order to hedge the referenced equity price exposure associated with the
cash settled share-based employee benefit scheme being run by the Group.
These SPVs are not legally owned by the Group. However, on IFRS 10 consolidation assessment has led the Group to
consolidate the structure and to recognize the underlying phantom scheme shares in the consolidated financial statements.
The underlying shares are not legally owned by the Bank and does not possess voting right associated with these shares.
(m) Instruments eligible for additional Tier 1 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. These notes
have been classified under equity.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
177
22. OTHER COMPREHENSIVE INCOME
2023
2022
Net changes in fair value of investments in debt securities designated at FVOCI:
Positive change in fair value
46,431
326
Negative change in fair value
(73,897)
(783,038)
Net change in fair value
(27,466)
(782,712)
Net amount transferred to profit or loss*
(1,381)
(39)
Foreign currency translation differences for foreign operation
(571,127)
(2,135,828)
Share of other comprehensive income of associates and a joint arrangement
13,654
(64,370)
Net changes in fair value of Cash Flow hedges
(51,982)
(162,708)
(638,302)
(3,145,657)
Net changes in fair value of equity investments designated at FVOCI
(153,524)
424,246
Share of other comprehensive income of associates and a joint arrangement
4,922
3,933
Revaluation on land and buildings**
57,825
63,925
Hyperinflation impact
543,518
2,290,119
Total other comprehensive loss
(185,561)
(363,434)
*Net amount transferred to profit or loss includes a positive change in fair value of QAR 112 thousand (2022: QAR 48
thousand) and a negative change in fair value of QAR 1,493 thousand (2022: QAR 9 thousand).
** This includes deferred tax amounting to QAR 20.6 million.
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 75.3 million (2022: QAR 70.3 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 2023.
24. INTEREST INCOME
2023
2022
Loans and advances to customers
7,241,903
5,546,214
Debt securities
1,454,121
1,227,810
Amounts deposited with banks
805,213
487,229
Amounts deposited with central banks
36,522
68,749
9,537,759
7,330,002
The amounts reported above include interest income, calculated using the effective interest method, that relate to financial
assets measured at amortized cost QAR 8,786 million (2022: QAR 6,885million) and at fair value QAR 752 million (2022:
QAR 445 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
178
25. INTEREST EXPENSE
2023
2022
Customer deposits
3,134,572
2,020,140
Debt securities
225,638
301,009
Other borrowings
1,245,819
596,130
Interest expense on lease liabilities
2,359
2,757
Due to Banks
1,062,030
446,912
5,670,418
3,366,948
26. FEE AND COMMISSION INCOME
2023
2022
Loans and advances
455,446
267,090
Credit and debit card fees
711,989
615,178
Indirect credit facilities
130,164
157,483
Banking and other operations
340,137
295,238
1,637,736
1,334,989
27. FEE AND COMMISSION EXPENSE
2023
2022
Credit and debit card fees
509,360
443,334
Brokerage services
195,941
84,490
Others
126,990
23,562
832,291
551,386
28. NET FOREIGN EXCHANGE GAIN
2023
2022
Dealing in foreign currencies & revaluation of spot assets
528,366
415,341
29. NET INCOME FROM INVESTMENT SECURITIES
2023
2022
Net gain on disposal of investment securities measured at fair value
32,411
50,626
Net Change in Fair-value of Investment securities
(18,889)
(229,790)
Dividend income
235,147
180,784
248,669
1,620
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
179
30. OTHER OPERATING INCOME
2023
2022
Rental income
110,658
120,906
Net derivative fair value
(73,235)
6,357
Other income
2,249
3,118
39,672
130,381
31. STAFF COSTS
2023
2022
Salary and benefits (Note)
720,929
559,029
Health care and medical insurance expenses
14,079
13,526
Staff end of services and pension fund contribution (Note 20 (i))
34,895
21,455
Training and education
1,478
1,171
771,381
595,181
Note: Salary and benefits include a cost of QAR 87 million (2022: a credit of QAR 67 million) with respect to share appreciation
rights due to change in the market value.
32. OTHER EXPENSES
2023
2022
Marketing and advertisement
44,379
32,527
Professional fees
23,481
18,434
Communication, utilities and insurance
63,131
46,986
Board of Directors’ remuneration
25,500
18,500
Occupancy, IT consumables and maintenance
69,763
59,679
Travel and related costs
2,012
1,057
Printing and stationery
6,824
4,916
Outsourcing service costs
26,912
22,846
Impairment of goodwill (Note 14)
5,104
3,678
Others
98,648
32,095
365,754
240,718
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
180
33. INCOME TAX EXPENSE
The components of income tax expense for the years ended 31 December 2023 and 2022 are as follows:
2023
2022
Current income tax
84,212
77,172
Deferred tax (benefit) / expense
(3,974)
37,173
80,238
114,345
Profit Before Tax
3,090,465
2,925,453
Less: Profit not Subject to Tax
(2,640,434)
(2,453,401)
Profit Subject to Tax
450,031
472,052
Effective tax rate
17.83%
24.22%
Tax Calculated Based on the Current Tax Rate (Effective Rate)
80,238
114,345
Income not subject to taxation
110,395
54,684
Expenses not deductible for taxation
(71,986)
(85,923)
Adjustments related to prior years
(38,409)
31,239
Income tax expense
80,238
114,345
Movement in Deferred Tax Balances
Recognized in
Deferred tax
31 December 2023
Net balances
at 1 January
Income
Statement
OCI
Exchange
difference
Net
Asset
Liability
Property and Equipment
(17,021)
851
20,600
(17,298)
(12,868)
(12,868)
-
Provisions
41,553
4,550
-
15,772
61,875
61,875
-
Derivatives and investment
securities
8,545
(694)
-
(7,851)
-
-
-
Unearned Revenue
2,282
83
-
(275)
2,090
2,090
-
Tax losses carried forward
1
-
-
-
1
1
-
Others
(16,102)
(816)
-
344
(16,574)
(16,574)
-
19,258
3,974 20,600
(9,308)
34,524
34,524
-
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
181
33. INCOME TAX EXPENSE (continued)
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
1
-
Others
1,403
(17,570)
-
65
(16,102)
(16,102)
-
53,135
37,173
(5,129)
(65,921)
19,258
19,258
-
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:
2023
2022
(Restated)
Basic/Diluted
Profit for the year attributable to the equity holders of the Bank
3,010,227
2,811,108
Less: Dividend on Instrument eligible for additional capital
(283,720)
(283,720)
Profit for EPS calculation
2,726,507
2,527,388
Weighted average number of outstanding shares in thousands (Note 21 (a))
4,047,254
4,047,254
Less: Employee incentive phantom scheme shares
(197,007)
(201,959)
3,850,247
3,845,295
Basic/Diluted earnings per share (QAR)
0.71
0.66
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
182
35. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
2023
2022
a) Contingent liabilities
Unutilized credit facilities
5,120,125
3,855,417
Guarantees
15,427,939
17,631,602
Letters of credit
3,495,074
3,034,342
Total
24,043,138
24,521,361
b) Capital commitments
Total
330,212
211,837
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
2023
2022
Cash and balances with central banks *
4,001,014
3,388,384
Due from banks up to 90 days
11,625,508
10,911,980
15,626,522
14,300,364
*Cash and balances with central banks exclude the mandatory cash reserve.
37. DERIVATIVES
In the ordinary course of business the Group enters into various types of transactions that involve derivative financial
instruments. Derivatives are financial instruments that derive their value from the price of underlying items such as equities,
bonds, interest rates, foreign exchange, credit spreads, commodities and equity or other indices. Derivatives enable users
to increase, reduce or alter exposure to credit or market risks. Derivative financial instruments include forwards, futures,
swaps and options. These transactions are primarily entered with banks and financial institutions. In the ordinary course of
business the Group enters into various types of transactions that involve derivative financial instruments. Derivatives are
financial instruments that derive their value from the price of underlying items such as equities, bonds, interest rates, foreign
exchange, credit spreads, commodities and equity or other indices. Derivatives enable users to increase, reduce or alter
exposure to credit or market risks. Derivative financial instruments include forwards, futures, swaps and options. These
transactions are primarily entered with banks and financial institutions.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
183
37. DERIVATIVES (continued)
Forwards represent commitments to purchase foreign and/or domestic currencies, including non-deliverable spot
transactions (i.e. the transaction is net settled). Forward rate agreements are individually negotiated interest rate futures
that call for a cash settlement at a future date for the difference between a contracted rate of interest and the current market
rate, based on a notional principal amount.
Swaps represents currency and interest rate swaps that are commitments to exchange one set of cash flows for another.
Swaps result in an economic exchange of cashflows arising out of currencies or interest rates (for example, fixed rate for
floating rate) or a combination of all these (i.e., cross‐currency interest rate swaps). No exchange of principal takes place,
except for certain cross currency swaps.
Options are contractual agreements that convey the right, but not the obligation, to either buy or sell a specific amount of
a commodity or financial instrument at a fixed price, either at a fixed future date or at any time within a specified period.
The Group’s credit risk represents the potential loss if counterparties fail to fulfil their obligation. This risk is monitored on an
ongoing basis with reference to the current fair value, notional amount of the contracts and the liquidity of the market. To
control the level of credit risk taken, the Group assesses counterparties using the same techniques as for its lending
activities.
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.
Derivatives held for trading
The Group uses derivatives, not designated in a qualifying hedge relationship, to manage its exposure to foreign currency,
interest rate and credit risks or initiates positions with the expectation of profiting from favourable movement in prices, rates
or indices. The instruments used mainly include interest rate and currency swaps and forward contracts. All changes in fair
value of derivatives held for tradng are recognised immediately in profit or loss.
Other derivatives includes , total return swaps and others which are not held to manage exposures mentioned above.
Where a derivative is not held for trading, and is not designated in a qualifying hedging relationship, then all changes in its
fair value are recognised immediately in profit or loss.
Derivatives held as fair value hedge
The Group uses derivative financial instruments for hedging purposes as part of its asset and liability management strategy
by taking offsetting positions in order to reduce its own exposure to fluctuations in exchange and interest rates. The Group
uses interest rate swaps to hedge against the changes in fair value arising from specifically identified interest bearing assets
such. The Group uses forward foreign exchange contracts and currency swaps to hedge against specifically identified
currency risks.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
184
37. DERIVATIVES (continued)
Derivatives held as cash flow hedge
The Group uses forward contracts/cross currency swaps to hedge the foreign currency risk arising from its financial
instruments. The Group has substantially matched the critical terms of the derivatives to have an effective hedge relationship.
Positive
fair value
Negative
fair value
Notional
amount
within 3
months
3-12
months
1-5 years
More than
5 years
At 31 December 2023:
Derivatives held for
trading:
Interest rate swaps
77,954
68,784
2,223,796
98,778
382,767
1,727,712
14,539
Forward foreign exchange
contracts
322,926
21,891
17,462,765
8,318,527
9,123,904
20,334
-
Other derivatives
387,934
448,618
6,384,357
775,432
2,330,042
1,874,647
1,404,236
Derivatives held for fair
value hedges:
Interest rate swaps
91,663
-
946,400
-
-
-
946,400
Derivatives held for cash
flow hedges:
Forward foreign exchange
contracts
-
159,933
2,116,284
-
1,448,735
167,440
500,109
Interest rate swaps
2,156
-
98,778
98,778
-
-
-
Total
882,633
699,226 29,232,380 9,291,515 13,285,448
3,790,133 2,865,284
At 31 December 2022:
Derivatives held for trading:
Interest rate swaps
30,806
46,276
19,956,253
4,931,484 14,104,090
906,127
14,552
Forward foreign exchange
contracts
394,107
69,769
16,820,735
6,441,863
7,697,804
2,224,490
456,578
Other derivatives
415,526
592,647 18,994,604
3,613,035
939,818
12,040,715
2,401,036
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 62,040,422
15,103,119 24,792,044
17,798,571
4,346,688
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
185
37. DERIVATIVES (continued)
At 31 December 2023, 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
800,000,000
23.3%
Bond Issuance
Floating for fixed
USD
46,000,000
2.5%
Cross Currency Swaps
Bond Issuance
CHF to USD
USD
362,166,897
1.8%
CHF
335,000,000
0.5%
HKD to USD
USD
95,053,138
1.9%
HKD
737,000,000
2.4%
NZD to USD
USD
48,043,480
2.3%
NZD
68,000,000
5.7%
Hedging instrument
Fair value Hedges:
Hedged item
Description
Currency
Notional in
currency
Average
Rate
Interest Rate Swaps
Govt Bonds
Fixed for floating
USD
210,000,000
2.83%
38. FUND MANAGEMENT
As at the end of the reporting date, the Group holds QAR 941 million (2022: QAR 452 million) worth of international
investment securities on behalf of its customers. Out of this amount, investment securities with a value of QAR 782 million
(2022: QAR 452 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. Fee and commission income earned from funds management for 2023 is QAR 10.7
million (2022: QAR 6.7 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
186
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 2023 and 31 December 2022
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.
2023
2022
Board members of the bank
- Loans, advances and financing activities
1,616,147
1,523,864
- Deposits
1,170,460
789,391
- Contingent liabilities and other commitments
4,507
13,809
- Interest and fee income
214,738
122,396
- Interest paid on deposits accounts of board members
35,661
29,325
- Others
2,160
157
- Remuneration and fee (Note 32)
25,500
18,500
Associates and joint arrangement companies
Due from banks
146,054
145,600
Due to banks
344,431
51,980
Deposits
6,228
5,995
Contingent liabilities
7,231
10,073
- Interest earned from associates
708
-
- Interest paid to associates
4,548
1,297
Key management of the bank
- Remuneration and other benefits*
50,648
47,115
- Loans and advances
8,019
7,522
* In addition to the above remuneration and other benefits, employees of the Group including senior management have
been granted share appreciation rights. At 31 December 2023, the cost for share appreciation rights for senior management
was QAR 29.9 million (2022: credit of QAR 43.3 million).
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
187
40. RESTATEMENT
The opening balances of the Group’s consolidated financial statements for the year ended 31 Decemeber 2023 and the
comparative figures have been restated due to the following:
a) Restatement related to the derivatives
During the year, the Group identified certain financial instruments (total return swaps) which met the definition of ‘derivatives’
as per IFRS 9, however the fair value of the derivatives had not been accounted for previously. As a consequence, other
liabilities and related expenses have been understated. This has not been recognized by retrospective application, due to
the practical inability to obtain certain historical data inputs to calculate the impact on the prior periods presented. The
adjustment has therefore been rectified by recognising the fair value of the derivative instruments in the current reporting
period as an opening adjustment as at 1 January 2023.
b) Restatement related to the consolidation of special purpose entities controlled by the Group
During the year, the Group identified certain special purpose entity structures which are controlled by the Group, however
were not being consolidated in the consolidated financial statements of the Group in accordance with IFRS 10 Consolidated
financial statements. Refer note 21(l) for details. As a consequence, equity, other assets and other borrowings, and interest
expense and net fee and commission income have been misstated. This has been rectified by restating each of affected
financial statement line items for prior periods in the statement of financial position. However, the net impact on the
statement of income for the year ended 31 December 2022 was not material as explained further below and is accordingly,
adjusted in the current year as an opening adjustment as of 1 January 2023.
c) Restatement related to impairment losses on loans and advances to customers
During the year, the Group identified that impairment losses had not been recognised on certain impaired loans and
advances to customers in 2022. These loans were classified as credit impaired in the previous year however the resultant
impairment losses were not recognised. As a consequence, loans and advances to customers have been overstated and
related impairment expenses have been understated. This has been rectified by restating each of the affected financial
statement line items for prior periods in the statement of financial position. However, the net impact on the statement of
income for the year ended 31 December 2022 was not material as explained further below and is accordingly, adjusted in
the current year.
The net impact of the restatements in (b) and (c) above did not have a material net impact on the statement of income for
the year ended 31 December 2022. Consequently, management has chosen not to restate the corresponding numbers in
the statement of income for the year ended 31 December 2022. Instead, these impacts have been adjusted during the
current period as an opening adjustment as of 1 January 2023.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
cbq.qa
188
40. RESTATEMENT (continued)
The following tables summarise the impact on the Group’s consolidated financial statements.
Consolidated statement of financial position as at 1 January 2022
As at 1
January 2022
(as previously
reported)
Restatement
related to the
derivatives
(note a)
Restatement
related to the
consolidation of
special purpose
entities (note b)
Restatement
related to the
impairment
losses (note c)
Restatement
total
As at 1
January
2022
(restated)
Assets
Other assets
6,090,977
-
(417,200)
-
(417,200)
5,673,777
Liabilities
Other borrowings
15,718,753
-
948,220
-
948,220
16,666,973
Equity
Employee incentive
phantom scheme shares
-
-
(934,016)
-
(934,016)
(934,016)
Retained earnings
2,922,719
-
(431,404)
-
(431,404)
2,491,315
Consolidated statement of financial position as at 31 December 2022
As at 3 1
December 2022
(as previously
reported)
Restatement
related to the
derivatives
(note a)
Restatement
related to the
consolidation of
special purpose
entities (note b)
Restatement
related to the
impairment
losses (note c)
Restatement
total
As at 31
December
2022
(restated)
Assets
Other assets
6,176,856
-
(218,174)
-
(218,174)
5,958,682
Liabilities
Other borrowings
15,941,527
-
1,130,220
-
1,130,220
17,071,747
Equity
Employee incentive
phantom scheme shares
-
-
(1,114,872)
-
(1,114,872)
(1,114,872)
Retained earnings
4,563,762
-
(233,522)
-
(233,522)
4,330,240
Due to the above rectification related to the employee incentive phantom scheme shares on account of consolidation of the
special purpose entities, the weighted average number of outstanding shares during the year ended 31 December 2022
have decreased, leading to a restatement of the previously reported basic and diluted earnings per share to 0.66 from
0.62, as disclosed in note 34.
Notes to the Consolidated
Financial Statements continued
As at and for the year ended 31 December 2023
QAR ‘000s
ANNUAL REPORT 2023
189
40. RESTATEMENT (continued)
Consolidated statement of financial position as at 1 January 2023
The net retrospective impact of the restatements, on the statement of income for the year ended 31 December 2022, was
not material, as disclosed in notes (b) and (c) above. Consequently, management has chosen not to restate the historical
numbers for profit or loss. Instead, these impacts have been adjusted during the current period as an opening adjustment
as of 1 January 2023, along with the impact of the restatement in note (a), for which the retrospective impact was deemed
impracticable to be identified.
As at 1 January
2023 (post-
restatement as of
31 December
2022)
Restatement
related to the
derivatives
(note a)
Restatement
related to the
consolidation of
special purpose
entities (note b)
Restatement
related to the
impairment
losses (note c)
Restatement
total
As at
1 January
2023
(restated)
Assets
Loans and advances to
customers
98,016,182
-
-
(346,231)
(346,231)
97,669,951
Other assets
5,958,682
-
348,331
-
348,331
6,307,013
Liabilities
Other liabilities
9,723,904
1,320,100
-
-
1,320,100 11,044,004
Equity
Retained earnings
4,330,240
(1,320,100)
348,331
(346,231)
(1,318,000)
3,012,240
41. RECLASSIFICATIONS
Certain comparatives figures have been reclassified in order to conform to the presentation for the current year. Such
reclassifications were made to improve the quality of presentation and do not affect the previously reported profit or equity.
cbq.qa
190
Supplementary Information
Financial Statement of the Parent
QAR ‘000s
(a) Statement of Financial Position – Parent
As at 31 December
2023
2022
(Restated)
ASSETS
Cash and balances with central banks
7,408,865
6,681,125
Due from banks
20,642,968
20,570,160
Loans and advances to customers
86,765,936
90,779,841
Investment securities
28,722,366
27,655,887
Investment in associates and a joint arrangement and subsidiaries
6,201,944
5,858,557
Property and equipment
2,599,840
2,536,627
Other assets
5,862,314
5,655,181
TOTAL ASSETS
158,204,233
159,737,378
LIABILITIES
Due to banks
18,589,817
23,950,009
Customer deposits
73,784,584
77,632,361
Debt securities
7,105,312
9,871,317
Other borrowings
22,606,783
13,439,626
Other liabilities
9,739,354
8,876,581
TOTAL LIABILITIES
131,825,850
133,769,894
EQUITY
Share capital
4,047,254
4,047,254
Legal reserve
9,763,430
9,763,429
General reserve
26,500
26,500
Risk reserve
2,340,332
2,340,332
Fair value reserve
(347,889)
(273,751)
Cash flow hedge reserve
(159,933)
(97,512)
Foreign currency translation reserve
(1,363,406)
(1,481,504)
Other reserves
1,087,955
834,978
Revaluation reserve
995,636
995,636
Retained earnings
4,168,504
3,992,122
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
20,558,383
20,147,484
Instruments eligible for additional capital
5,820,000
5,820,000
TOTAL EQUITY
26,378,383
25,967,484
TOTAL LIABILITIES AND EQUITY
158,204,233
159,737,378
ANNUAL REPORT 2023
191
Supplementary Information
Financial Statement of the Parent continued
QAR ‘000s
(a) Statement of Financial Position – Parent (continued)
Restatement related to impairment losses on loans and advances to customers
The Group identified provisions for impairment losses on loans and advances to certain customers that had not been recognized
previously. These provisions were related to triggering events that occurred in prior years, and have been adjusted retrospectively
. For further details, please refer to Note 40 of the consolidated financial statements.
Restatement related to
impairment losses
Loans and advances to customers
(346,231)
Net impairment losses on loans and advances to customers
(346,231)
cbq.qa
192
Supplementary Information
Financial Statement of the Parent continued
QAR ‘000s
(b) Statement of Income – Parent
For the year ended 31 December
2023
2022
(Restated)
Interest income
7,739,069
5,715,036
Interest expense
(4,241,665)
(2,186,287)
Net interest income
3,497,404
3,528,749
Fee and commission income
1,341,307
1,125,599
Fee and commission expense
(567,643)
(466,892)
Net fee and commission income
773,664
658,707
Net foreign exchange gain
110,903
371,060
Net income from investment securities
223,655
(6,060)
Other operating income
115,267
85,615
Net operating income
4,720,893
4,638,071
Staff costs
(441,254)
(358,950)
Depreciation
(123,964)
(121,877)
Amortization and impairment of intangible assets
(46,268)
(46,268)
Net impairment reversals / (losses) on investment securities
5,846
(11,480)
Net impairment losses on loans and advances to customers
(962,584)
(1,354,548)
Net impairment reversals / (losses) on other financial assets
111,069
(153,478)
Other provisions
(39,405)
(71,210)
Other expenses
(402,625)
(337,238)
Profit for the year
2,821,708
2,183,022
Accounting Policies for Financial Information of the Parent
The statement of financial position and income statement of the parent bank are prepared using the same accounting policies
followed for the consolidated financial statements.