al khaliji (KCBK)has reported net profit of QR109 million ($29.9 million) for the first quarter of the year, compared to QR131.5 million for the same period in 2013, marking a fall of 17.1 per cent.

Loans and advances grew by 11 per cent during the quarter, to reach QR22.9 billion, and net interest income increased by 12 per cent.

The acceleration in sustainable recurring revenues is in line with the bank’s strategy to progressively rely less on investment gains for future growth in favor of increased proceeds from a growing banking franchise, said Rob McCall, Group chief executive officer, al khaliji.

"al khaliji is starting the year with a solid financial performance supported by a growing banking franchise,” McCall explained.

“Following the Group’s strong performance in 2013 it was expected that investment returns would be more muted this year given the developments in quantitative easing and US treasury rates. Protecting the net margin, by adopting a prudent hedging strategy for our fixed income revenue streams, and growing our franchise with quality assets remains amongst our primary objectives.

“In conjunction with the introduction of our new IT system we will continue to streamline our processes and procedures, aiming to deliver a leaner organization and lasting long-term operational cost savings.  We are pleased that our capital strength supports our plans for continued balance sheet initiatives focused on quality earnings,” he added.

McCall stated that the bank’s financials are firmly in line with expectations, noting that this quarter al khaliji has delivered on two key objectives as it invested in an increased physical presence and a new enhanced IT system to deliver on future growth plans consistent with its medium term plan.

The bank has stepped up financing of large infrastructural projects and its private sector preferred customers to drive an increase in its lending book, up 63 per cent year-on-year, while preserving superior asset quality as reflected in a low NPL ratio.

al khaliji’s investment portfolio now accounts for 37 per cent of total assets in contrast to the end of March last year when it made up half of the bank’s assets.

Al Khaliji France SA’s net profit reached QR16.3 million, up 5 per cent compared to Q1 2013 and represents 15 per cent of the Group net income.

Net fee and commission income of QR37.8 million grew by 11 per cent on Q4 2013; however it is QR9.4 million lower year-on-year owing to non-recurring revenues. This reduction flows through on a first quarter comparative basis to Net Operating Income which is QR 213.8 million.

Income from the banking franchise now accounts for 92 per cent of profits, compared to 81 per cent last year, reflecting a growing book with less reliance on investment income which made up 19 per cent in Q1 2013.

Sheikh Hamad Bin Faisal Bin Thani Al Thani, chairman and managing director at al khiliji, said: "al khaliji continues to expand its banking franchise in a manner that is capable of delivering long term value to its shareholders and customers.

“The financial strength of the organisation and our commitment to deliver on our identified strategic initiatives ensures we are well positioned to deliver on future business growth,” he added. – TradeArabia News Service