#1THE COMMERCIAL BANK (P.S.Q.C.) Investor Presentation November 2019 البنك التجاري COMMERCIAL BANK 55#2Disclaimer This presentation has been prepared by and is the sole responsibility of THE COMMERCIAL BANK (P.S.Q.C.). This presentation is provided for information purposes only. The contents of this presentation do not constitute or form part of an offer to sell or issue or any solicitation of any offer to purchase or subscribe for any securities for sale in any jurisdiction. Any offering of any security or other financial instrument that may be related to the subject matter of this presentation (a "security") will be made pursuant to a separate and distinct final base prospectus (a "Base Prospectus") and in such case the information contained herein will be superseded in its entirety by any such Base Prospectus. 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By accepting this document you will be taken to have represented, warranted and undertaken that (i) you are a person to whom this presentation may be given (as described above); (ii) you have read and agree to comply with the contents of this notice; and (iii) you will treat and safeguard as strictly private and confidential all such information and take all reasonable steps to preserve such confidentiality. 65 2#3QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#4Qatar in Perspective - A Resilient and Well Diversified Economy... Sovereign Rating: Aa3/ AA / AA- (Moody's/ S&P/ Fitch) Attractive Economic Growth 3.98% 3.66% 2.13% 1.97% 1.58% 1.49% 2014A 2015A 2016A 2017A Real GDP Growth 2018A 2019F Deep Natural Resources 843 Qatar gas reserves are forecasted to last for at least another 130 years Qatar 308 215 63 23 7 UAE Saudi Arabia Kuwait Oman ■Gas Reserves, 2019E, Trillion of Cubic Feet Bahrain High GDP per Capita (2019F GDP per Capita, US$ '000) 69.7 Constantly among world's top 3 economies in terms of GDP per capita since 2011 37.7 29.3 25.3 22.9 17.8 Qatar UAE Kuwait Bahrain KSA Oman Well Diversified Economy, Set for Further Improvement 70% 68% 63% 63% 65% 48% 2014A 2015A 2016A 2017A 2018E ■Nominal Nonhydrocarbon Share of Overall GDP (%) Source: International Monetary Fund, Qatar Country Report; Oxford Economics; EIA (US Energy Information Administration). 2019F#5...With a Stable Business Environment, Supportive of Foreign Investments Fiscal Breakeven Oil Price (US$) - 2019E I 49 49 54 86 87 95 70 0 Qatar Kuwait UAE Saudi Oman Bahrain Arabia General Government Fiscal Balance (% of GDP)-2019F 7.0% i 6.7% I I (1.6%) I (6.1%) (6.7%) (8.0%) iQatar Kuwait UAE Saudi Oman Bahrain Arabia I Current Account Balance (% of GDP) - 2019F 9.0% 8.2% ! 6.0% 4.4% I I (4.3%) Iran Iraq (7.2%) UAE Kuwait Qatar Saudi Bahrain Oman Arabia Kuwait Saudi Arabia Qatar UAE Qatar Oman Yemen Highly Competitive Business-friendly Framework (2017-2018 Global Competitiveness Report) #53 #46 #45 #36 #25 #29 I I I UAE Qatar Saudi Arabia Bahrain Kuwait Oman Source: International Monetary Fund, Regional Economic Outlook: Middle East and Central Asia Update; World Economic Forum, The Global Competitiveness Report. 5#6Qatar Has a Robustly Regulated Banking Sector Benefitting from a Strong Government Support Loan Book & Customer Deposit Growth ($bn) CAGR 10.5% (1) CAGR 7.9% (1) 273 250 258 230 226 223 228 206 200 179 165 179 2014 2015 2016 2017 2018 Q3 2019 ■Loans ■Deposits Strong Prudential Regulatory Framework Minimum Basel III CAR 14.00% (2) QCB reserve requirement 4.75% of total deposits Max. financing to deposits ratio 100% Capital Liquidity Financing Ownership Permitted foreigner ownership up to 49% in listed banks Financing to real estate limit: 150% of shareholder's equity and Tier 1 capital Provisioning Risk reserves to be maintained at 2.5% of net loans and advances in addition to ECL per IFRS 9 Source: Qatar Central Bank, Qatar Exchange and Bloomberg. 1. CAGR calculated from 31 December 2014 to 30 September 2019 2. 14.00% includes an ICAAP buffer of 1%. Qatari Banks Enjoy Strong Government Support % Owned by Qatar Investment Authority and Government related vehicles 52% QNB 17% بنك الدوحة DOHA BANK QATAR 17% QIB Lojnoll 46% الخليجي al khaliji 17% البنك التجاري COMMERCIAL BANK 65 17% QIIB الإسلامي G G G O 25% مصرف الريان MASRAF AL RAYAN Commercial Bank share holding profile Foreign Nationals 17% Qatari Nationals 83% 48% البنك الأهلي ählibank 6#7Historical Government Support for the Banking Sector 1 Capital Injection Announcement In October 2008 the Qatar Investment Authority announced its plan to acquire equity ownership interest between 10% and 20% in all domestic banks listed on the Qatar Exchange 3 Acquisition of Equity Portfolios In March 2009 the Qatari Government purchased the domestic equity portfolios of seven of the nine domestic banks listed on the Qatar Exchange 5 Dividend Waiver Waiver of the dividend payable to the Qatari Government for the year end 2009 7 Injection of Post blockade liquidity Injection of liquidity and USD post blockade to stabilise banking system October 2008 November December January 2008 2008 2009 February 2009 March 2009 April 2009 May 2009 June 2009 January 2010 February 2010 March 2010 February June 2011 2017 2 First Capital Injection The Qatar Investment Authority completed the first stage of the subscription process in the Bank's share capital by investing QAR807m, representing 5% of the Bank's share capital and further strengthening the Capital base. QIA subsequently transferred its shares to Qatar Holdings 4 Acquisition of Real Estate Portfolios 6 In June 2009 the Qatari Government announced that it would purchase the portfolios of real estate loans and other exposures of commercial banks listed on the Qatar Exchange, for their net book values Final Tranche of Direct Capital Injection A number of Qatari Banks receive the final and third tranche of capital injection from the Qatar Investment Authority as part of the Governments' initial plan to increase its stake in all domestic banks listed on the Qatar Exchange 7#8New initiatives announced ◆ North field expansion project. This will increase Qatar's LNG capacity from 77 million tons/year to 110 million tons/year. ◆ With the expansion, LNG will be made available to downstream industries. ◆ 100% foreign ownership through Manateq free zone. Qatar has announced a project for the biggest cracker complex. Expansion of Hamad international airport. ◆ Creating Qatar as a tourism hub with visa on arrival for more than 80 countries and creating a 2nd cruise terminal. ◆ Permanent Residency to expats. ◆In addition, QIA and QCB continue to have healthy reserves. 8#9Direct Trade Flows Consequences for Qatar Total exports from Bahrain, Egypt, Saudi Arabia and the United Arab Emirates to Qatar accounted for only c.0.1% of Qatar's GDP in 2018 Imports from the four countries are also small, accounting for c.0.7% of Qatar's GDP in 2018. Qatar's main export destinations are in Asia Country 2018 Exports to Qatar (%GDP) 2018 Imports from Qatar (% GDP) Saudi Arabia United Arab Emirates Bahrain Egypt Total 0.0% 0.1% 0.0% 0.4% 0.0% 0.1% 0.0% 0.1% Qatar shifted all imports via shipping channels from the Dubai port to Sohar & Sallalah Ports in Oman Some consumer goods were rapidly substituted by products from Turkey and other countries Most of Qatar Airways flights continue to operate normally, with diversions made where necessary Source: Euromonitor, July 2019. 0.3% 0.7% 9#10Liquidity Management - Commercial Bank (Domestic): Limited exposure to impacted GCC countries while liquidity levels remain adequate Commercial Bank deposits by Geography Pre Embargo Qatar Asia 15% N.America 4% Kuwait 4% UAE 3% Europe 2% Other 1% Saudi 0% Exposures to "impacted GCC" countries QAR(m) Dec 17 Dec 18 Sep 19 71% Customer Deposits 21 288 341 Interbank takings 1,219 662 350 As % of Total Funding 1.3% 1.0% 0.7% Post Embargo Financial Indicators Dec 17 Dec 18 Sep 19 Qatar 83% Asia 13% % of resident deposits 85% 81% 83% Kuwait 2% Europe 2% Other 0% N.America 0% Saudi 0% % of non resident deposits 15% 19% 17% UAE 0% 10 10#11QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#12Commercial Bank Group Overview The Commercial Bank Q.S.C. ("CB") Established in 1975, CB is Qatar's 2nd largest conventional bank by assets, net loans, customers' deposits and total equity ◆ Enjoys a 7.9% (1) market share of loans and 7.7% (1) market share of deposits in Qatar Operates a network of 29 branches in Qatar and is present in Turkey, Oman and UAE through its subsidiaries and associates AlternatifBank, National Bank of Oman ("NBO") and United Arab Bank ("UAB") Strong capitalization with Basel III capital adequacy ratio of 16.2% (1) Focus on sustainable controlled growth in its core business, proactive management of risk, liquidity and capital and continuing improvement in the quality of its service to customers In the long term, expansion strategy is a blend of strong organic growth in Qatar and international expansion through banking alliances A Diversified Geographical Footprint... Strong and Supportive Shareholding Structure (1) Qatar Holding 16.8% Foreign Nationals 16.9% ...That Has Been Evolving Overtime - Financial Assets (QAR billion) Qatar Nationals 66.3% Alternatifbank CB Turkey Ownership 100.0% (1) # Branches 29 # Branches 49 127.5 119.2 122.7 113.2 6% 106.2 5% 5% 9% 17% 16% 7% 19% 18% 2% 1% 20% -5% 5% 8% UAB Qatar 75% 78% NBO 71% 68% 66% UAE Ownership 40.0% (1) Oman Ownership 34.9% (1) 2014 2015 # Branches 11 # Branches 66 Qatar Other GCC 2016 ■Other Middle East 2017 2018 Rest of the World 1. As of September 2019 12#13Commercial Bank is the Second Largest Conventional Bank in Qatar by Assets, Net Loans, Customers' Deposits and Total Equity Leading Market Shares in Qatar (1) 8.8% Assets 7.9% 7.7% Loans Deposits Total Assets Breakdown by Operating Segment (Q3 2019) Others 5% Associates 3% ABank. 13% Retail/ 13% Wholesale 66% Commercial Bank Credit Ratings - outlook revised to stable by all rating agencies, in line with revised upgrade in outlook for Qatar Foreign Currency Bank Total Assets (QAR million) 115,652 123,421 130,380 138,449 145,694 135,071 2014 2015 2016 2017 Loans and Advances to Customers (QAR million) 2018 Q3 2019 89,122 72,541 76,601 77,797 83,702 89,095 2014 2015 2016 2017 2018 Q3 2019 Net Profit (QAR million) 1,940 Date 1,434 1,663 1,504 1,260 501 604 Rating Agency Deposits/IDR Outlook LT ST Moody's S&P Fitch A3 Prime 2 Stable Jul 19 BBB+ A A-2 F1 Stable Jun 19 Stable Mar 19 1. Standalone Qatar Operations, market shares based on Qatar's Market size from Qatar Central Bank as of 30 September 2019. 2014 2015 2016 2017 2018 9m 2018 9m 2019 13#14Key Strengths & Competitive Advantages Strong Domestic Franchise; Leading Market Position 2nd largest conventional bank in Qatar by assets, net loans, customers' deposits and total equity, in operation since 1975 Strong corporate relationships across public and private sectors Proven strength in retail banking, leading credit card provider GDR Issue (first by Qatari bank), US$5.0 bn EMTN programme in place Experienced Management with Proven Track Record Committed and experienced senior management team Prominent, influential and stable Board of Directors Senior managers have significant banking (domestic and international) experience Shareholder Support Strong Financial Profile Diversified Footprint Developed 5year strategy to transform banks performance Systemic importance to the Qatari banking sector given the Bank's scale Qatar's Government holds a 16.8% in Commercial Bank through Qatar Holding and a further 10% through funds and other entities High earnings potential Sustainable growth in core loan portfolio with good asset quality Diversified revenue base; expansion outside Qatar to increase diversification Strong capitalization Operates branches in Qatar and is present in Turkey, Oman and UAE through its subsidiaries and associates AlternatifBank ("ABank"), National Bank of Oman ("NBO") and United Arab Bank ("UAB") New 5 year strategic plan commenced and announced to the investor community in Nov 2016. Focus points include improving CET1 capital, reshaping the loan portfolio to improve asset quality, aligning the cost to income ratio with market peers by stream lining the branch network and operations. 14#15Qatar Bank Snapshot Total Assets (QAR billion, Q3 2019) Customers' Deposit (¹) (QAR billion, Q3 2019) Y-o-Y growth 7.1% 3.7% (1.4%) 3.9% 12.9% 1.5% (14.0%) 4.8% Net Loans (QAR billion, Q3 2019) 7.1% 1.6% Y-o-Y growth 5.0% 18.1% 5.5% 8.3% (4.6%) 6.5% Y-o-Y growth 7.5% 0.6% 3.8% 1.5% 9.8% 11.7% (8.9%) 3.1% 912 653 663 155 146 107 105 107 89 107 76 53 51 42 65 74 32 30 30 67 59 32 27 25 QNB QIB Doha Bank Masraf ΑΙ QIIB Rayan ΑΙ Ahli Khaliji Bank QNB QIB Masraf ΑΙ Rayan Doha Bank QIIB ΑΙ Ahli Khaliji Bank QNB QIB Masraf ΑΙ Rayan Doha Bank QIIB ΑΙ Ahli Khaliji Bank Total Liabilities (QAR billion, Q3 2019) Total Equity (QAR billion, Q3 2019) 93 Total CAR Ratio (Q3 2019) 819 22 22 133 124 93 91 14 13 46 44 36 7 7 6 19.7% 18.9% 18.4% 18.2% 16.9% 16.9% 16.2% 15.9% IIII QNB QIB Doha Bank Masraf Al QIIB Rayan ΑΙ Ahli Khaliji Bank QNB QIB 597 Masraf ΑΙ Doha QIIB Bank ΑΙ Ahli Khaliji Bank Rayan Masraf ΑΙ Rayan ΑΙ Khaliji QIB QNB Ahli Doha Bank Bank QIIB Conventional Bank Islamic Bank In Qatar, Islamic and conventional banking operations have to be segregated Source: Companies' financial statements. 1. Islamic Banks' deposits calculated as Customer's Current Accounts plus Equity of Investment Account Holders. 15#16Strategic intent 1 Maintain a minimum CET1 range of 11.0% to 11.5% 2 De-risk legacy assets, diversify the portfolio and proactively exit high risk names 3 Reshape and diversify our loan book 4 Costs broadly held flat until CB moves back into alignment with the market average 5 Focus on client experience as a key differentiator 6 Deepen our digital leadership through end-to-end process automation 7 8 9 'One Team - One Bank' culture Market leader for compliance and good governance A region-wide 'Alliance of banks' with closer integration of risk protocols and business strategy for sustainable earnings 16#17Executive summary Strategic Focus Progress • • Results • Capital & Funding Reshaping Loan Book Net profit growth of QAR 19.4% to QAR 1,504m for 9 months ended 30 September 2019 compared to same period in 2018. Results were driven mainly by an increase in operating income and lower costs. Net operating profit increased by 14.6% to QAR 2,029m. ROAE increased to 9.4% in 9 months 30 September 2019, from 8.2% in same period in 2018. Best Cash Management Bank in Qatar for the third year in a row from "The Asian Banker" • Best Transaction Banking service in Qatar from "The Asian Banker" . • • . • • • Commercial Bank won the Asian Banker's 'Best Retail Bank in Qatar' award for the third year in a row 'Financial Technology Innovation Award 2019' for the 60 Seconds Online Remittance service Best Corporate Governance in Qatar 2019 award by World Finance. CET1 and Total Capital Ratios increased to 11.0% and 16.2% respectively as compared to 9.7% and 14.6% at 30 September 2018. Total consolidated deposits increased by QAR 2.5bn, up 3.5% at 30 September 2019 vs December 2018 Consolidated loan book at QAR 89.1bn in Sept 2019, up 5.2% v December 2018. Focus remains on re-shaping profile of the lending book, by diversifying risk across a range of sectors including decreasing real estate exposure and increasing exposure to government and public sector. Government sector has increased by 4%, real estate and contracting sectors were down by 4% and 3% respectively as compared to Sept 2018 NPL ratio reduced to 4.9% in Sept 19 compared to 5.5% in Sept 2018 due to cash recovery/settlement. Consequently, the loan coverage ratio (including ECL) increased to 95.2% as compared to 83.6% in Q3 2018. • ✓ Provisioning . Cost of Risk reduced to 90bps in Sept 2019 compared with 107bps in 2018. • ✓ Costs • Consolidated Cost to Income ratio reduced from 33.5% to 28.9% and in Qatar from 28.8% in 9m 2018 to 25.7% in 9m 2019 led by digitisation, automation, productivity enhancements and operating income. Operating expenses reduced by QAR 68.3m (7.7%) vs 9m 2018. This was mainly within the Qatar domestic business where costs reduced by QAR 46m (6.8%) vs 9m 2018. Alternatif bank reported net profit of TL 170m (QAR 109m) for 9m 2019 compared to TL 92m (QAR 75m) in 9m 2018. Subsidiaries . NBO reported flat net profit of OMR 38.3m (CB's share QAR 126.3m) as compared to 9m 2018. & Associates • UAB continues to be an asset held for sale in Sept 2019. 17#18Progress against our 5-year plan : Net profit further increases quarter on quarter CB Consolidated YTD Sept YTD Sept 2019 Var.: YTD 2019 vs Var.: Q3 Var.: Q3 2019 vs 2019 vs 2018 Q1 2018 Q2 2018 | Q3 2018 | Q4 2018 Q1 2019 Q2 2019 Q3 2019 YTD 2018 Q2 2019 | Q3 2018 Operating Income 919 914 831 845 900 947 1,006 2,853 2,663 7.1% Costs 311 309 272 281 278 274 272 824 892 7.6% Operating Profit 608 604 559 564 622 673 734 2029 1,771 14.6% Provisions 236 200 195 205 221 208 197 625 630 0.9% 6.3% 0.4% (0.2%) 9.0% 5.3% (1.0%) 21.1% 31.3% Share of Associates 43 43 42 42 42 43 43 128 129 (0.5%) Tax 11 (2) 2 (2) 12 6 11 28 10 Net Profit 405 450 405 404 431 503 570 1,504 1,260 (189.6%) 19.4% 0.3% (87.0%) (539.8%) 2.8% 13.3% 40.9% Lending Volume 92,789 87,195 85,815 84,642 Deposit Volume 79,306 75,116 75,323 71,786 85,161 81,597 84,834 89,095 89,095 76,901 74,294 74,294 85,815 75,323 3.8% 5.0% 3.8% (1.4%) (3.4%) (1.4%) NIM 2.3% 2.3% 2.0% C/I Ratio 33.9% 33.8% 32.7% 2.1% 33.2% 2.0% 30.9% 2.2% 28.9% 2.4% 27.1% 2.3% 2.2% 0.1% 0.2% 0.5% 28.9% 33.5% 4.6% 1.8% 5.7% NPL Ratio 5.3% 5.4% 5.5% 5.6% Coverage Ratio 86.4% 84.2% 83.6% 78.9% 5.6% 80.3% 4.9% 4.9% 4.9% 5.5% 0.6% 0.6% 97.0% 95.2% 95.2% 83.6% 11.6% (1.8%) 11.6% CET 1 9.3% 9.7% 9.7% 10.5% 10.9% 11.0% 11.0% 11.0% 9.7% 1.3% 1.3% CAR 14.7% 14.5% 14.6% 15.5% 16.1% 16.3% 16.2% 16.2% 14.6% 1.6% (0.1%) 1.6% ROAE 8.0% 9.2% 8.1% 7.8% 8.5% 9.8% 10.6% 9.4% 8.2% 1.3% 0.7% 2.5% ROAA 1.1% 1.2% 1.1% 1.2% 1.2% 1.4% 1.6% 1.4% 1.2% 0.2% 0.2% 0.4% COR (bps) 104 88 89 95 103 99 71 90 96 (5) 28 18 18#19Group Financial Performance - Nine months ended 30 September 2019 Group Profitability Consolidated Balance Sheet QAR Million 9m 2019 9m 2018 % QAR Million 9m 2019 9m 2018 % Net interest income 1,939 1,908 1.6% Total assets 145,694 138,695 5.0% Non-interest income 914 755 21.1% Loan & advances 89,095 85,815 3.8% Total costs 824 892 -7.7% Investment Securities 27,034 21,653 24.8% Net provisions 625 630 -0.9% Customers' deposits 74,294 75,323 -1.4% Associates income 128 129 -0.5% Total equity 21,536 19,708 9.3% Net profit after tax 1,504 1,260 19.4% Performance Ratios Capital 9m 2019 9m 2018 QAR Million 9m 2019 9m 2018 ROAE 9.4% 8.2% RWA (QAR million) 116,842 118,169 ROAA 1.4% 1.2% CET 1 ratio (Basel III) 11.0% 9.7% NIM 2.3% 2.2% Total Capital ratio (Basel III) 16.2% 14.6% 19#20New award wins in 2019 validate our strategy البنك التجاري COMMERCIAL BANK 55 البنك التجاري تحقيقه everyth COMMCIAL ANK البنك التجاري COMMERCIAL BANK 55 Validates investment in our franchise كل شيء يمكن تحقين rything is possible Validates CBIS' in-house capabilities: 1. "Best Retail Bank in Qatar" for the third year in a row 2. "Financial Technology Innovation Award 2019" for the 60 Seconds Online Remittance service . We can develop truly world-class technology That beats major international banks Roll out in a short time frame THE ASIAN BANKER® MIDDLE EAST & AFRICA AWARD 3. "Best Cash Management Bank in Qatar" for the third year in a row 4. "Best Transaction Banking service in Qatar” for the first time 5. ம் "Best Corporate Governance in Qatar" from World Finance for the first time 65 THE ASIAN BANKER TRANSACTION BANKING AWARDS 20 20#213,000- 2,912 3.500- 4.000- 4,500 CB bond and share price CB USD REG S Bond Price & Yield Chart (Nov 2018 to Oct 2019) AS577205 Corp (COMQAT 5 05/24/23) AS577205 Corp (COMQAT 5 05/24/23) 5,000- COMQATS 05/24/23 Corp Last Price (R1) 107.002 Mid Yield To Maturity (L1) 2,912 Bloomberg 5.00 -108.000 4.50 AMA 107.002 Nov Dec Jan Feb Mar Apr May Jun 2019 Jul Aug Sep Oct 2018 The above is for COMQAT 5 05/24/23 Corp as the CHF-denominated bonds are relatively less liquid. -106.000 4.00 -105.000 -104.000 3.50 -103.000 3.00 -102.000 101.000 2.50 -100.000 Sep-16 Nov-16 Jan-17 Commercial Bank share price Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 21 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19#22Leadership Position in Digital Banking Launched a world class digital remittance service Leading edge Mobile App Leveraging new technology Over 2.8 million transactions completed through the "60 seconds" value proposition Modern, fully functional and easy to use, with high use and high customer satisfaction 90%+ Launching Mobile Wallets, optimizing QR Codes, use of biometric face recognition & voice commands International Remittances (Volume 000s - All Currencies) 550 64 X8.6 Q1-2017 Q3-2019 The No.1 Financial App in Qatar Available on the App Store Get it on Google play 22#23A strong and diverse retail business Market leading position in Retail Banking A meaningful contribution to CB, with high ROE Deeply embedded franchise in the community High quality & diversified income profile Robust Retail loan book Liquid Balance Sheet with high quality deposit base One of the largest franchises, matching the biggest banks in the country 15% of assets, 34% of deposits 42% of operating income, 30%+ ROE A trusted brand, with loyal customer base Well represented in key segments Over 80% of income from deposits and fees Providing stable & capital efficient earning streams 65% with tangible security 35% against salary Loan to Deposit Ratio 49% 52% low cost funds 23#24Dominating cards Market leader in Qatar for cards and payments. Dominant Player in Acquiring Business in Qatar Transforming the payment eco-system in Qatar, complementing Qatar's payment systems vision 1.1 Mn+ cards, total spend $3.3 Billion p.a. Growing faster than market average 8,800 merchants, 13,600 POS 50%+ Market Share (non government) 2.2Mn+ contactless transactions and 500k+ cards Unique ability to lead change Growth in Contactless Transactions 1,500,000 TAPS! 8,900 Apr-18 x28 251,000 Sep-19 24#25QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#26Earnings Performance - Nine months ended 30 September 2019 Profitability Net interest income up by 1.6% to QAR 1,939m YTD 2019 vs YTD 2018. NIM increased to 2.3% YTD 2019 vs 2.2% YTD 2018. ◆NIM has improved from 2.2% in Q2 2019 to 2.4% in Q3 2019. ◆Margins have been managed through active increase in high yielding assets, and diversifying liquidity sources to minimize cost of funding. Net interest margin 2.5% 2015 2.3% 2.2% 2.2% 2.2% 2.2% 2016 2017 2018 9m 2018 9m 2019 Net interest income as a % of average interest earning assets, including (i) loans and advances to customers, (ii) bonds and (iii) loans to other credit institutions Non-interest income up by 21.1% to QAR 914m vs YTD 2018 ◆Net fee income increased by 9.2% YTD 2019 to QAR 622m with higher transaction banking fees and credit facility related fees. ◆Net foreign exchange income up 40.6% to QAR 214m YTD 2019 vs QAR 152m YTD 2018. Operating Profit 2,258 2,335 2,204 2,029 1,942 1,771 2015 2016 2017 2018 9m 2018 9m 2019 26#27Cost to Income Ratio improves as cost efficiency measures take effect Operating Expenses Cost to income ratio lower at 28.9% YTD 2019 v 33.5% for the same period in 2018 driven by a reduction in staff costs and G&A expenses. Staff costs reduced by 2.2% to QAR 503m YTD 2019 v 2018. G&A expenses decreased led by tighter control across all general and administrative spend. Continued focus on digital processes and tight expense management. In Qatar C/I Ratio reduced from 28.8% YTD 2018 to 25.7% in 2019. Alternatifbank C/I Ratio reduced from 50.6% YTD 2018 to 37.1% YTD Cost to Income Ratio Consolidated 45.7% 42.8% 37.5% 33.4% 33.5% 28.9% 2019. 2015 2016 2017 2018 9m 2018 9m 2019 Cost to Income Ratio Domestic 40.2% 38.0% 2015 2016 33.0% 29.8% 28.8% 25.7% 2017 2018 9m 2018 9m 2019 * Outsource service provider cost for 2017 was QAR 44m, which has now been brought in-house to subsidiary 27#28Improved loan book structure Summary Loans to customers at QAR 89.1bn, up 3.8% v Sept 2018. Growth in government and public sectors Reduction in real estate and contracting sectors Loan book diversified across sectors Corporate customers represent 80% of total loan book Focus continues on improving market share in Government and Public sector. Loan book breakdown by division (Sept 2019) Retail 20% Corporate 80% Qatari banks credit facilities breakdown by sector - Aug 2019 Loan book breakdown by sector - Sept 2019 Outside Qatar, Industry, 2%. 6% Consumption, 13% Sector Sep-19 Sep-18 Other, 1% Govt and Public Sector 14% 10% Industry 9% 8% Gov. & Semi-. Gov. Agencies, 31% Real Estate, 16% Commercial 12% 9% Services 30% 29% Contracting 5% 8% Real Estate 22% 26% Consumption 7% 8% Contracting, 4% Source: QCB Services, 16% Other 1% 2% Commercial, 12% 100% 100% 28#29Asset Quality - 30 Sept 2019: Decrease in provision for loan losses Summary Net impairment for loan loss of QAR 586m v QAR 616m YTD 2018 QAR 229m for Wholesale QAR 193m for Retail QAR 164m for Alternatifbank NPL ratio reduced to 4.9% from 5.5% in Sept 2018 Loan coverage at 95.2% v 83.6% in Sept 2018 Net Provision for loan loss (QAR million) Loan coverage ratio 95.2% 83.6% 78.9% 81.0% 78.9% 71.2% 2015 2016 2017 2018 Sep-18 Sep-19 * 2018 onwards includes ECL Non-performing loan ('NPL') ratio (90 day basis) 5.6% 2.03% 1.64% 5.0% 1.13% 1.07% 0.95% 0.90% 1,697 4.2% 842 1,268 2015 2016 2017 Held to Maturity 5.6% 5.5% 4.9% 3,025 2,825 2,434 2,174 927 3,219 700 2,696 517 725 927 616 586 927 970 713 480 843 617 805 839 841 971 2018 Sep-18 Sep-19 2015 2016 2017 2018 Sep-18 Sep-19 Cost of Risk (%) Retail UHNW SME Corporate Gross NPLs / Gross Loans 29 29#30Investment Portfolio - 30 Sept 2019: High asset quality with 89% of the portfolio invested in HQLA Government Bonds Summary Investment portfolio up 24.8% to QAR 27.0bn v Sept 2018 Driven by purchase of highly rated sovereign bonds. Investment in global debt securities to benefit from easing monetary conditions. 88.9% Government Bonds and QCB T-Bills Investment portfolio by credit rating Investment portfolio - 30 Sept 2019 vs 30 Sept 2018 Other debt sec 10.9% Investment Funds Equities 0.2% Investment Funds 0.4% Other Debt Sec 8.1% Equities 0.7% 0.1% Government Bonds 88.9% Government Bonds 90.9% 30 Sept 2018 30 Sept 2019 Investment portfolio evolution (QAR million) 19% Credit Rating Portfolio Weight 16% 16% 14% 13% 12% AAA to AA- 87% A+ to A- 7% 27,034 22,108 21,533 BBB+ to BB 3% 19,629 15,854 15,377 BB to B- 2% Unrated 1% 2015 2016 2017 Investment securities 2018 9m 2018 9m 2019 % of Total Assets 30#31Funding: Continue to build up diverse sources of funding Summary Customers' deposits down by 1.4% to QAR 74.3bn in Sept 2019 v Sept 2018 representing 51% of the total balance sheet Well diversified funding mix Total equity represents 15% of funding mix Syndicated loan issuance of USD 750m in Dec 2018 - Total funding mix – 30 Sept 2019 ■Customers' Deposits Total Shareholders' Equity Due to Banks and Financial Institutions Debt Securities & Other borrowings Other Liabilities 16% 4% 14% 15% Debt issued and other borrowed funds Commercial Bank credit ratings 51% Issuance Type (QARM) Sep-19 Sep-18 Foreign Ccy Rating Subordinated Notes 3,446 3,425 Deposits/IDR Agency Bank Strength Outlook Date EMTN 6,341 7,910 LT Senior Notes 603 2,434 Moody's A3 ST Prime 2 bal Stable Jul 19 Other loans (including CPs) 10,717 11,907 Fitch A F1 bb+ Stable Mar19 Total 21,107 25,676 S&P BBB+ A-2 bb+ Stable Jun19 31#32Well diversified deposit portfolio Summary Customer deposits reduced by 1.4% to QAR 74.3 Bn v YTD 2018 Diversified deposit mix with Government and Semi-Government at 24%, corporate at 27% and individuals at 32% Current and Savings accounts deposit composition remains stable at 32% of the deposit base. The mix of Qatar non resident deposit is 17%. Qatari banks deposits breakdown by sector -Aug 2019 Source: QCB Gov. & Semi- Gov. Agencies, Corporate, 21% 33% Non Resident, 23% Individuals, 23% Customer deposits (QAR million) ■Time Deposits Savings Deposits Demand & Call Deposits 77,633 71,321 75,323 74,294 69,787 70,924 2015 2016 2017 2018 Sep-18 Sep-19 Deposits by customer type - Sept 2019 Gov. & Semi- Gov. Agencies 24% Corporate 27% Non resident deposits 17% Individuals 32% 32#332015 Capitalization Levels - 30 Sept 2019 Increase in fair value reserves by QAR 0.6bn. Capital Adequacy Ratio at 16.2% (Basel III) Summary Total equity at QAR 21.5bn up by QAR 1.5bn from Q4 2018, due to: Increase in retained earnings by QAR 0.6bn on account of profits of 9m 2019 adjusted by the dividends payment of 2018. Total equity (QAR million) Reserves AT1 ■Equity 21,021 19,999 I 19,707 21,536 19,301 17,299 Increase in risk reserve by QAR 0.2 bn. Dividend distribution per share (QAR) 3 ■Cash dividend 1.5 1 0.5 2016 2017 2018 ■Bonus shares 2015 2016 2017 2018 Sep-18 Sep-19 Capital Adequacy Ratio (Basel III) Min ratios 2018: CET1 9% Tier1 11%, Total Capital ratio 14% 9.9% 13.5% 11.8% 9.7% 2015 2016 15.2% 13.1% 11.2% 14.5% 16.1% CET1 Tier1 ■Total Capital ratio 9.7% 13.1% 14.6% 11.0% 14.5% 16.2% 2017 Sep-18 Sep-19 33#34QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#35Commercial Bank Financial Performance - Nine months 30 Sept 2019 (Domestic) Profitability Balance Sheet QAR Million 9m 2019 9m 2018 % QAR Million 9m 2019 9m 2018 % Net interest income 1,704 1,668 2.2% Total assets 129,087 122,346 5.5% Non-interest income 755 686 10.1% Loan & advances 77,068 73,839 4.4% Total costs 633 679 -6.8% Securities investments 26,083 20,353 28.2% Net provisions 464 522 -11.1% Customers' deposits 64,264 66,325 -3.1% Net profit 1,362 1,153 18.1% Total equity 21,412 19,730 8.5% Performance Ratios ROAE (Consol) ROAA NIM Capital 9m 2019 9m 2018 9.4% 8.2% QAR Million RWA (QAR million) 9m 2019 9m 2018 96,438 99,589 1.4% 1.2% CET 1 ratio 11.4% 10.0% 2.3% 2.2% Total Capital ratio 16.0% 14.6% 35#36Commercial Bank - Standalone Qatar Operations Strategy Rights issue of QAR1.5 bn in Q1 2017 in order to strengthen core capital Increase in share holder equity to strengthen capital adequacy Well diversified funding portfolio (both geographically and by product channel) and adequate liquidity along with high quality liquid assets Capital Adequacy Liquidity / Funding Conscious effort to improve CB's coverage ratio through prudent provisioning and to Asset Quality manage non-performing Core Strengths De- leverage High Risk Assets loans Cost Control Senior Management Conscious effort to improve average rating of the entire loan book by proactively exiting high risk assets, increasing government and semi government portfolio mix while reducing exposure to the real estate sector. Tight governance on Opex while leveraging efficiencies from branch streamlining and operations through digitalization and end to end automation. Experienced senior management and board with new key senior management over the past 36 months. 36#37Strategic Investment in Alternatif Bank of Turkey 55 Transaction Highlights Commercial Bank now owns 100% of Alternatif Bank with full Board control Initial 75% stake in Alternatif Bank acquired in 2013 Acquisition in-line with business/geographic diversification strategy Alternatifbank Key Highlights Established in 1991 Mid-size Turkish bank that predominately serves medium sized companies through a country network of 49 branches The Bank's main product ranges cover trade finance instruments, working capital finance, cash management and portfolio management Two major subsidiaries in Leasing and Investment Banking areas Recently rebranded with CB logo Governance CB fully controls board CB representation on all Board committees Close liaison between CB and Alternatif Bank management Alternatifbank Financial Highlights Changed management in late 2017 Tightened lending for 2018, focus on improving performance at the operating level while taking a prudent provisioning approach Now started joint transactions with CB leveraging CB balance sheet, example being the recent Mayhoola transaction Total assets of TL 29bn as of 30th September 2019 For consolidation into CB's financial statements, Alternatif Bank Group delivered a net profit of TL 170m for 9m 2019 as compared with TL 92m in 9m 2018 Alternatif Bank contributes 12% to CB balance sheet and 7% to its profit and loss Alternatif Bank provides commercial/corporate banking services and products 37#38Alternatifbank Results - Nine months ended 30 Sept 2019 Alternatifbank of Turkey Net profit after tax at TL 170m v TL 92m in 9m 2018 Operating income up by TL 239m v 9m 2018 Operating expenses up by TL 20m v 9m 2018 Loan book up to TL 18.6bn v TL 18.2bn in Q3 2018 Customer deposits up to TL 15.6bn v TL 14.3bn in Q3 2018 CB injected USD 50 million capital into Alternatif Bank CET1 ratio 8.8%, Tier 1 9.8% and total capital adequacy ratio of 18.1% Net Profit (TL million) Profitability TL million Operating Income Total Operating Expenses Total Provision Profit Before Tax Tax Expenses Net Profit * Balance Sheet TL million Assets 170 117 96 92 49 2 Cash and Balances with Cetral Bank Due from banks Loans and advances to customers 2015 2016 2017 2018 9m 2018 9m 2019 Total Investments Net operating income (TL million) Non-interest income Other Assets Total Assets Liabilities & Equity 9m 2019 9m 2018 735 496 (273) (253) (249) (139) 213 104 (43) (12) 170 92 9m 2019 9m 2018 2,533 2,506 3,103 2,328 18,640 18,165 3,601 3,906 1,528 2,562 29,405 29,467 Net interest income Non-interest income to net operating income (%) 27% 4% 29% 33% 19% 35% Due to banks Customers' deposit Other borrowed funds 601 1,433 15,556 14,271 9,760 10,315 Other Liabilities 1,041 1,727 Shareholders Equity 2,447 1,721 Total Liabilities and Equity 29,405 29,467 * 2015 2016 2017 2018 9m 2018 9m 2019 Net Profit excludes TL 35m from MTM on AT1 capital that is eliminated on consolidation. 38#39Turkish currency and economy show signs of stability Commercial Bank Support for Alternatifbank Commercial Bank has injected USD 100m of capital in 2018, USD 50m in 2019. Liquidity lines have been established. Qatar Government has announced an injection of USD 15bn to support the Turkish economy. Loan book breakdown by Sector Industry Sector Industry Portfolio Weight 36% Services 25% Contracting 15% Commercial 14% Real Estate 1% Others 9% BRSA actions and Impact BRSA has taken actions to stabilize the liquidity and capital in the local banking system; Reducing reserve requirements of banks Relaxing the conversion of the USD/TL exchange rate in the calculation of the capital adequacy ratio Tighten exchange control regulations BRSA has recently announced measures for NPLs, which banks are reviewing and will take action from Q4 2019 Loan book breakdown by currency 30 September TRY FCY 48% 52% 39#40Strategic investment in National Bank of Oman (NBO) Transaction Highlights CB holds 34.9% stake in NBO, acquired in 2005 Acquisition in-line with business/geographic diversification strategy NBO Key Highlights Oman's 1st local bank; in operation since 1973 The bank is the 3rd largest bank by total assets in Oman at USD 9bn as at 30 September 2019 As at 30 September 2019 NBO had approximately 11.8% market share in loans and 11.4% market share in deposits in Oman. Presence in Oman (66 branches); 1 branch each in Egypt, Abu Dhabi and Dubai Full service bank, with strong franchise in corporate and retail banking ◆1st bank in Oman to introduce online banking ◆ Consumer segment offers SMS banking and salary cards Offers real-time access to account information through its "SAMA" Corporate Internet Banking platform Sadara offering (premier banking) Recent Updates CB announced that it will not support the merger of NBO with Bank Dhofar as it was not considered beneficial for NBO in the long term. Hence NBO did not go ahead with the merger. Major Shareholders Ministry of Defence 8.0%. Civil Service Employees Pension Fund 11.3% Public 31% CB 34.9% Suhail Bahwan Group Holding LLC 14.7% Sharing best practices within the Group i.e. risk management, product innovation, IT, finance and training 40 40#41Associates' Performance YTD 30 Sept 2019 National Bank of Oman (NBO) Net profit after tax at OMR 38.3m, increased from OMR 38.1m in YTD Sept 2018 Net operating income OMR 51.2m, remains constant from YTD Sept 2018 Net interest income up 3% to OMR 72m Non-interest income increased 3% to OMR 26m Loan portfolio increased by 7% to OMR 2.8bn v Sept 2018 Customer deposits up by 2% to OMR 2.5bn v Sept 2018 NBO Performance (OMR million) Operating Income ■Profit 136 136 132 129 95 98 60 56 51 44 38 38 United Arab Bank (UAB) UAB continues to be an asset held for sale in Q3 2019. 2015 2016 2017 2018 Sep-18 Sep-19 41#42QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#43Group Financial Performance - Nine months ended 30 September 2019 in US$ (1) Group Profitability Consolidated Balance Sheet QAR Million 9m 2019 9m 2018 % QAR Million 9m 2019 9m 2018 % Net interest income 533 524 1.6% Total assets 40,026 38,103 5.0% Non-interest income 251 207 21.1% Loan & advances 24,477 23,576 3.8% Total costs 226 245 -7.7% Investment Securities 7,427 5,949 24.8% Net provisions 172 173 -0.9% Customers' deposits 20,410 20,693 -1.4% Associates income 35 35 -0.5% Total equity 5,916 5,414 9.3% Net profit after tax 413 346 19.4% Performance Ratios ROAE ROAA NIM Capital 9m 2019 9m 2018 QAR Million 9m 2019 9m 2018 9.4% 8.2% RWA (QAR million) 32,099 32,464 1.4% 1.2% CET 1 ratio (Basel III) 11.0% 9.7% 2.3% 2.2% Total Capital ratio (Basel III) 16.2% 14.6% (1) QAR/USD = 0.27; pegged exchange ratio of as of 30 Sept 2019 43