#1THE COMMERCIAL BANK (P.S.Q.C.) Investor Presentation July 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and distinct final base prospectus (a "Base Prospectus") and in such case the information contained herein will be superseded in its entirety by any such Base Prospectus. In addition, because this presentation is a summary only, it may not contain all material terms and this presentation in and of itself should not form the basis for any investment decision. The recipient should consult the Base Prospectus, a copy of which may be available from an arranger or dealer, for more complete information about any proposed offer of any security. Any purchase of any security must be made solely on the basis of the information contained in the Base Prospectus. The information and opinions herein are believed to be reliable and have been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness of the information and opinions. There is no obligation to update, modify or amend this presentation or to otherwise notify the recipient if any information, opinion, projection, forecast or estimate set forth herein changes or subsequently becomes inaccurate. The information herein includes statements that constitute forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ as a result of risks and uncertainties. Each recipient is strongly advised to seek its own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Analyses and opinions contained herein may be based on assumptions that, if altered, can change the analyses or opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any security, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. The Issuers and any arranger or dealer retained by the Issuers disclaim liability for any loss arising out of or in connection with a recipient's use of, or reliance on, this presentation. Securities that may be discussed herein may not be suitable for all investors and potential investors must make an independent assessment of the appropriateness of any transaction in light of their own objectives and circumstances, including the possible risks and benefits of purchasing any such securities. By accepting receipt of this presentation the recipient will be deemed to represent that it possesses, either individually or through its advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any security discussed herein. If a security is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the price or value of, or the income derived from, the security, and any investor in that security effectively assumes currency risk. Prices and availability of any security described in this presentation are subject to change without notice. THIS PRESENTATION IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, INTO THE UNITED STATES. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") nor with any securities regulatory authority of any state or other jurisdiction in the United States and may not be offered or sold in the United States (as such term is defined in Regulation S under the Securities Act) or sold to, or for the account or benefit of U.S. persons unless they are registered under the Securities Act, in a transaction not subject to the registration requirements of the Securities Act, or pursuant to an exemption from registration. No public offer of, or registration of any part of, the securities mentioned herein is being made in the United States. This presentation is not being made, and this presentation has not been approved, by an authorised person for the purpose of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly, this presentation is not being distributed to, and must not be passed on to the general public in the United Kingdom. This presentation is directed solely at (i) persons outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the "Order"), (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iv) any other persons to whom it may otherwise be lawfully distributed in accordance with the Order (all such persons in (i)-(iv) above being "relevant persons"). Any investment activity to which this presentation relates will only be available to and will only be engaged with relevant persons. Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute an offer of securities to the public in the United Kingdom pursuant to an exception contained in the FSMA in connection with offers to a restricted category of qualified investors. This presentation and the information contained herein is confidential and may not be reproduced, distributed or otherwise transmitted, in whole or in part, without the prior written consent of the Issuers. This document and/or the information contained herein, are not for publication or distribution, directly or indirectly, to persons in the United States (within the meaning of Regulation S under the Securities Act) or to entities in Canada, Australia or Japan or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States securities laws and/or the securities laws of other countries. 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% 2.15% 1.58% 1.43% 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) 70.3 Constantly among world's top 3 economies in terms of GDP per capita since 2011 39.8 29.1 25.8 22.5 18.1 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$) - 2019E 49 49 97 95 85 65 49 Current Account Balance (% of GDP) - 2019F 7.4% 5.9% 4.6% 3.5% (3.6%) Iran Iraq Qatar Kuwait UAE Saudi Bahrain Oman Arabia Kuwait UAE ! Qatar (8.7%) Saudi Bahrain Oman Arabia Kuwait General Government Fiscal Balance (% of GDP)-2019F I 9.5% 1 6.1% I (0.8%) (7.9%) (8.4%) (9.9%) Saudi Arabia Qatar UAE Qatar Oman Yemen Highly Competitive Business-friendly Framework (2017-2018 Global Competitiveness Report) #54 #47 #50 #39 #27 #30 I I Kuwait Qatar UAE Saudi Bahrain Oman Arabia I UAE Qatar Saudi Oman Bahrain Kuwait Arabia Source: International Monetary Fund, Regional Economic Outlook: Middle East and Central Asia Update; World Economic Forum, The Global Competitiveness Report. 5#6Qatar Has a Robustly Regulated Banking Sector Benefitting from a Strong Government Support Loan Book & Customer Deposit Growth ($bn) CAGR 9.8% (1) CAGR 8.4% (1) 250 258 266 233 230 226 223 206 200 179 165 179 2014 2015 2016 2017 2018 Q1 2019 ■Loans ■Deposits Strong Prudential Regulatory Framework Capital Liquidity Financing Ownership Minimum Basel III CAR 14.00% (2) QCB reserve requirement 4.75% of total deposits Max. financing to deposits ratio 100% Financing to real estate limit: 150% of shareholder's equity and Tier 1 capital Permitted foreigner ownership up to 49% in listed banks Risk reserves to be maintained as at 31 Dec 2017 post IFRS 9 Provisioning implementation in addition to NPL provisioning depending on classification of financing Source: Qatar Central Bank, Qatar Exchange and Eikon. 1. CAGR calculated from 31 December 2014 to 31 March 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 47% 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 48% Foreign Nationals 17% Qatari Nationals 83% البنك الأهلي ählibank#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 July 2011 2018 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 ◆ Expansion of the 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. 100% foreign ownership through Manateq free zone. ◆ 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. ◆ Qatar has announced a project for the biggest cracker complex. ◆In addition, QIA and QCB continue to have healthy reserves. 00#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% 6#10Liquidity Management - Commercial Bank (Domestic): Limited exposure to impacted GCC countries while liquidity levels remain adequate Commercial Bank deposits by Geography Pre Embargo Exposures to "impacted GCC" countries QAR(m) Dec 17 Dec 18 Jun 19 71% Customer Deposits 21 288 396 Qatar Asia 15% N.America 4% Kuwait 4% UAE 3% Europe 2% Other 1% Saudi 0% Post Embargo Interbank takings 1,219 662 410 As % of Total Funding 1.3% 1.0% 1.0% Financial Indicators Dec 17 Dec 18 Jun 19 Qatar 78% Asia 15% % of resident deposits 85% 81% 78% Kuwait 4% Europe 1% Other 1% N.America 0% Saudi 0% % of non resident deposits 15% 19% 22% UAE 1% 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 an 9.6% (1) market share of banks deposits and 8.8% (1) market share in Loans 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 16.3% (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) Foreign Nationals 16.9% Qatar Holding 16.8% ...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 14 # Branches 66 Qatar Other GCC 2016 ■Other Middle East 2017 2018 Rest of the World 1. As of June 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) 9.9% Total Assets (QAR million) 9.6% 8.8% 115,652 123,421 130,380 138.449 135,071 141 292 Assets Loans Deposits Total Assets Breakdown by Operating Segment (Q1 2019) 2014 2015 2016 2017 Loans and Advances to Customers (QAR million) 2018 H1 2019 Total: QAR143,959 m Others 5% Associates 3% Total CB Qatar: 80% 89,122 72,541 76,601 77,797 83,702 84,845 ABank. 12% Retail/ 14% Wholesale 66% 2014 2015 2016 2017 2018 H1 2019 Commercial Bank Credit Ratings - outlook revised to stable by all rating agencies, in line with revised upgrade in outlook for Qatar Net Profit (QAR million) Foreign Currency Bank 1,940 Date 1,434 1,663 855 934 501 604 Rating Agency Deposits/IDR Outlook LT ST Moody's S&P Fitch A3 Prime 2 Stable Jul 19 BBB+ A A-2 Stable Jun 19 F1 Stable Mar 19 1. Standalone Qatar Operations, market shares based on Qatar's Market size from Qatar Central Bank as of 31 March 2019. 2014 2015 2016 2017 2018 H1 2018 H1 2019 13#14Key Strengths & Competitive Advantages Strong Domestic Franchise; Leading Market Position Experienced Management with Proven Track Record Shareholder Support Strong Financial Profile Diversified Footprint Developed 5year strategy to transform banks performance 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 Committed and experienced senior management team Prominent, influential and stable Board of Directors (some Directors have been with the bank since its inauguration) Senior managers have significant banking (domestic and international) experience Appointment of new key senior management over past two years including; CEO Joseph Abraham, COO Leonie Lethbridge and Kimberly Reid (Organisational Effectiveness and Strategic Leadership) 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 (Q1 2017 QAR1.5bn Rights issue & Asset Revaluation QAR 1.1bn), reshaping the loan portfolio to improve asset quality, aligning the cost to income ratio with market peers by streaming-lining the branch network and operations. 14#15Qatar Bank Snapshot Total Assets (QAR billion, Q1 2019) Net Loans (QAR billion, Q1 2019) Customers' Deposit (¹) (QAR billion, Q1 2019) Y-o-Y growth 5.0% 5.3% 2.9% 2.8% (8.2%) 9.7% (11.8%) (1.6%) 6.0% 2.3% (1.6%) (3.1%) 2.9% Y-o-Y growth 7.6% (9.1%) 1.0% 4.5% Y-o-Y growth 1.6% (8.2%) 4.5% (2.0%) (9.0%) (10.9%) (8.3%) 882 634 623 155 144 100 96 106 85 54 50 76 108 59 82 40 31 31 28 64 54 35 28 24 QNB QIB Masraf ΑΙ Doha Bank QIIB ΑΙ Al Ahli Khaliji Bank QNB QIB Rayan Masraf ΑΙ Rayan Doha Bank QIIB ΑΙ Al Ahli Khaliji Bank QNB QIB Masraf ΑΙ Rayan Doha Bank QIIB ΑΙ Al Ahli Khaliji Bank Total Liabilities (QAR billion, Q1 2019) 796 135 124 88 83 48 44 35 Total Equity (QAR billion, Q1 2019) 86 20 20 13 13 765 Total CAR Ratio (Q1 2019) 19.3% 18.8% 18.5% 18.4% 18.0% 17.1% 16.1% 16.1% Masraf QNB QIB 5977 ΑΙ Doha Bank ΑΙ Al Ahli QIIB QNB QIB Khaliji Bank Doha Bank Rayan Masraf ΑΙ Rayan Khaliji Masraf ΑΙ QIIB Al Ahli Bank ΑΙ QIB QNB Rayan ΑΙ Al Ahli Doha Khaliji Bank Bank QIIB 69 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 Net profit growth of QAR 9.2% to QAR 934m for H1 2019 compared to H1 2018. Results were driven mainly by an increase in non interest income, lower costs and lower provisioning. Net operating profit increased by 6.8% to QAR 1,295m. ROAE increased to 9.0% in H1 2019, from 8.5% in H1 2018 Results • 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 Capital & Funding Reshaping Loan Book . • • • • • CET1 and Total Capital Ratios increased to 11.0% and 16.3% respectively as compared to 9.7% and 14.5% in H1 2018. Total consolidated deposits increased by QAR 5.6 bn, up 7.8% in H1 2019 vs Q4 2018 LDR at 110.3% in H1 2019 as compared to 117.4% in Dec 2018. Consolidated loan book at QAR 84.8bn in H1 2019, up 1.4% v Dec 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 5%, real estate and contracting sectors were down by 2% and 4% respectively as compared to H1 2018 NPL ratio reduced to 4.9% in June 19 compared to 5.6% in Dec 2018 due to cash recovery/settlement. Consequently, the loan coverage ratio (including ECL) increased to 96.2% as compared to 80.3% in Q1 2019. Cost of Risk reduced to 102bps in H1 2019 compared with 107bps in 2018. ✓ Provisioning • • ✓ Costs Subsidiaries • • Consolidated Cost to Income ratio reduced from 33.9% to 29.9% and in Qatar from 28.9% in H1 2018 to 26.6% in H1 2019 led by digitisation, automation, productivity enhancements and operating income. Operating expenses reduced by QAR 69m (11.1%) vs H1 2018. This was mainly within the Qatar domestic business where costs reduced by QAR 36m (7.9%) vs H1 2018. Despite the economic volatility, Alternatifbank reported net profit of TL 99m (QAR 64m) for H1 2019 compared to TL 77m (QAR 69m) in H1 2018. & Associates . Injected USD 50 million capital in June 2019. • NBO reported flat net profit of OMR 24m (CB's share QAR 83m) as compared to H1 2018. • UAB continues to be an asset held for sale in H1 2019. 17#18Progress against our 5-year plan : Net profit further increases quarter on quarter CB Consolidated QAR Million Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Operating Income 919 914 831 845 900 947 Costs 311 309 272 281 278 274 Operating Profit 608 604 559 564 622 673 Provision 236 200 195 205 221 208 Associates Income 43 43 42 42 42 43 Net Profit 405 450 405 403 431 503 Lending Volume 92,728 87,195 84,783 83,702 85,161 84,845 Deposit Volume 79,300 75,116 74,894 71,321 81,597 76,904 NIM 2.3% 2.3% 2.0% 2.0% 2.0% 2.2% C/I Ratio YTD 33.9% 33.8% 32.7% 33.2% 30.9% 28.9% NPL Ratio 5.3% 5.4% 5.5% 5.6% 5.6% 4.9% Coverage Ratio 86.4% 84.2% 83.6% 78.9% 80.3% 96.2% CET 1 9.3% 9.7% 9.7% 10.5% 10.9% 11.0% CAR 14.7% 14.5% 14.6% 15.5% 16.1% 16.3% 18#19Group Financial Performance - Half year ended 30 June 2019 Group Profitability Consolidated Balance Sheet QAR Million H1 2019 H1 2018 % QAR Million H1 2019 H1 2018 % Net interest income 1,218 1,328 -8.3% Total assets 141,292 139,887 1.0% Non-interest income 629 504 24.8% Loan & advances 84,845 87,195 -2.7% Total costs 552 621 -11.1% Investment Securities 23,347 21,704 7.6% Net provisions 428 436 -1.8% Customers' deposits 76,904 75,116 2.4% Associates income 85 87 -2.3% Total equity 20,589 19,365 6.3% Net profit after tax 934 855 9.2% Performance Ratios Capital H1 2019 H1 2018 QAR Million H1 2019 H1 2018 ROAE 9.0% 8.5% RWA (QAR million) 112,173 119,660 ROAA 1.3% 1.2% CET 1 ratio (Basel III) 11.0% 9.7% NIM 2.1% 2.3% Total Capital ratio (Basel III) 16.3% 14.5% 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. 2. 3. "Best Retail Bank in Qatar" for the third year in a row "Financial Technology Innovation Award 2019" for the 60 Seconds Online Remittance service "Best Cash Management Bank in Qatar" for the third year in a row 4. "Best Transaction Banking service in Qatar" for the first time . 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 THE ASIAN BANKER TRANSACTION BANKING AWARDS 20#215.000 4.500 4.000 3.500 3.052 3.000 CB bond and share price CB USD REG S Bond Price & Yield Chart (May 2018 to July 2019) пли 2 108.000 107.027 5.00 106.000 4.50 +105.000 104.000 4.00 103.000 3.50 ►102.000 101.000 3.00 -100.000 -99.000 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2018 2019 AS577205 Corp (COMQAT 5 05/24/23) Daily 01JAN2017-15JUL2019 Copyright 2019 Bloomberg Finance L.P. 15-Jul-2019 15:14:34 The above is for COMQAT 5 05/24/23 Corp as the CHF-denominated bonds are relatively less liquid. 2.50 Sep-16 Nov-16 Commercial Bank share price Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 21#22Leadership Position in Digital Banking Launched a world class digital remittance service Leading edge Mobile App Leveraging new technology Over 2 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) 64 Q1-2017 x8 523 Q2-2019 The No.1 Financial App in Qatar Available on the App Store Get it on Google play 22 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 47% 53% 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, 13,000 POS 50%+ Market Share (non government) 1.5Mn+ contactless transactions and 400k+ cards Unique ability to lead change Growth in Contactless Transactions 1,500,000 TAPS! 8,900 Apr-18 x23 205,000 Jun-19 24#25QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#26Earnings Performance - Half year ended 30 June 2019 Profitability Net interest income down by 8.3% to QAR 1,218m in H1 2019 vs H1 2018. NIM reduced to 2.1% in H1 2019 vs 2.3% in H1 2018. However NIM has improved from 2.0% in Q1 2019 to 2.2% in Q2 2019. ◆Margins have been managed through active loan book re- pricing, and diversifying liquidity sources to minimize the increasing cost of funding. Non-interest income up by 24.8% to QAR 629m vs H1 2018 Net fee income increased by 5.8% in H1 2019 to QAR429m with higher transaction banking fees and credit facility related fees. ◆Net foreign exchange income up 143.5% to QAR 143m in H1 2019 vs QAR 59m in H1 2018 mainly due to FX income from Turkey operations. Net interest margin 2.5% 2015 2.3% 2.2% 2.2% 2.2% 2.1% 2016 2017 2018 H1 2018 H1 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 IIS-Interest in Suspense Operating Profit 2,258 2,335 2,204 1,942 1,212 1,296 2015 2016 2017 2018 H1 2018 H1 2019 26#27Cost to Income Ratio improves as cost efficiency measures take effect Operating Expenses Cost to income ratio lower at 29.9% v 33.9% in H1 2018 driven by a reduction in staff costs and G&A expenses. Cost to Income Ratio Consolidated 45.7% Staff costs reduced by 5.2% to QAR 336m in H1 2019 v 2018. 42.8% G&A expenses decreased led by professional fees, and tighter control across all general and administrative spend. Continued focus on digital processes and tight expense management. In Qatar C/I Ratio reduced from 28.9% in H1 2018 to 26.6% in 2019. Alternatifbank C/I Ratio reduced from 50.7% in H1 2018 to 37.8% in H1 37.5% 33.4% 33.9% 29.9% 2019. 2015 2016 2017 2018 H1 2018 H1 2019 Cost to Income Ratio Domestic 40.2% 38.0% 2015 2016 33.0% 29.8% 28.9% 26.6% 2017 2018 H1 2018 H1 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 84.8bn, down 2.7% v H1 2018. Growth in governmental and public sectors Reduction in real estate and contracting sectors Loan book diversified across sectors Corporate customers represent 78% of total loan book Focus continues on improving market share in Government and Semi-Government. Loan book breakdown by division (June 2019) Retail 22% Corporate 78% Qatari banks credit facilities breakdown by sector - May 2019 Loan book breakdown by sector - June 2019 Outside Qatar, Industry, 2% 7% Consumption, 14% Sector H1 2019 H1 2018 Other, 1%. Govt and Public Sector 15% 10% Industry 9% 9% Real Estate, 16% Commercial 10% 9% Services 29% 29% Gov. & Semi-. Gov. Agencies, 32% Contracting 4% 8% Real Estate 23% 25% Consumption 8% 8% Services, 13% Contracting,. 4% Other 2% 2% Commercial, 100% 100% Source: QCB 12% 28#29Asset Quality - 30 June 2019: Significant decrease in provision for loan losses as impairment on legacy portfolio reduces Summary Net Provision for loan loss of QAR 434m v QAR 428m in H1 2018 QAR 165m for Wholesale QAR 153m for Retail QAR 116m for Alternatifbank NPL ratio reduced to 4.9% from 5.6% in Q4 2018 Loan coverage at 96.2% v 78.9% in Q4 2018 Net Provision for loan loss (QAR million) Loan coverage ratio 96.2% 84.2% 78.9% 81.0% 78.9% 71.2% 2015 2016 2017 2018 H1 2018 H1 2019 * 2018 onwards includes ECL Non-performing loan ('NPL') ratio (90 day basis) 5.6% 2.03% 1.64% 5.0% 1.13% 1.07% 1.09% 1.02% 1,697 4.2% 1,268 5.6% 5.4% 4.9% 3,025 2,825 2,605 2,209 927 3,219 842 561 2,696 517 725 807 927 956 713 485 428 434 843 617 805 839 871 902 2015 2016 2017 2018 H1 2018 H1 2019 2015 2016 2017 2018 H1 2018 H1 2019 Held to Maturity Cost of Risk (%) Retail UHNW SME Corporate Gross NPLs / Gross Loans 29#30Investment Portfolio - 30 June 2019: High asset quality with 89% of the portfolio invested in HQLA Government Bonds Investment portfolio - 30 June 2019 vs 30 June 2018 I Other debt sec 10.9% Investment Funds Equities 0.2% Investment Funds 0.5% Other Debt Sec 7.1% Equities 1.4% Summary Investment portfolio up 7.6% to QAR 23.3bn v H1 2018 Driven by Purchase of Government Bonds and other debt securities, offset by a decrease in the equity portfolio as we exit from non core business activities 89% Government Bonds and QCB T-Bills 0.1% Investment portfolio by credit rating Government Bonds 88.9% 30.6.2019 Government Bonds 90.9% Investment portfolio evolution (QAR million) 30.6.2018 17% Credit Rating Portfolio Weight 16% 16% 14% 13% 12% AAA to AA- 92% A+ to A- 2% 23,347 22,108 21,704 BBB+ to BB 2% 19,629 15,854 15,377 BB to B- 3% Unrated 1% 2015 2016 2017 Investment securities 2018 H1 2018 H1 2019 % of Total Assets 30#31Funding: Continue to build up diverse sources of funding Summary Customers' deposits up by 2.4% to QAR 76.9bn in H1 2019 v H1 2018 representing 54% of the total funding base Well diversified funding mix Shareholders' equity represents 15% of funding mix Syndicated loan issuance of USD 750m in Dec 2018 Total funding mix - 30 June 2019 ■Customers' Deposits Total Shareholders' Equity 4% 15% Due to Banks and 12% Financial Institutions Debt Securities & Other 15% borrowings Other Liabilities Debt issued and other borrowed funds Commercial Bank credit ratings 54% Issuance Type (QARM) H1 2019 H1 2018 Foreign Ccy Rating Subordinated Notes 3,437 3,436 Deposits/IDR Agency Bank Strength Outlook Date EMTN 6,272 7,906 LT Senior Notes 1,650 2,585 Moody's A3 ST Prime 2 bal Stable Jul 19 Other loans (including CPs) 9,805 12,124 Fitch A F1 bb+ Stable Mar19 Total 21,165 26,051 S&P BBB+ A-2 bb+ Stable Jun19 31#32Demand & Call Deposits 75,116 76,904 71,321 Well diversified deposit portfolio Summary Customers' deposits increased by 2.4% to QAR 76.9 Bn v H1 2018 Diversified deposit mix with Government and Semi-Government at 25%, corporate at 26% and individuals at 30% Current and Savings accounts deposit composition remains stable at 31% of the deposit base. The mix of Qatar non resident deposit is 19%. Customers' deposits (QAR million) ■Time Deposits ■Savings Deposits 69,787 70,924 77,633 2015 2016 2017 2018 H1 2018 H1 2019 Qatari banks deposits breakdown by sector - May 2019 Deposits by customer type - June 2019 Source: QCB Gov. & Semi- Gov. Agencies, Corporate, 21% 33% Non Resident, 23% Individuals, 23% Gov. & Semi- Gov. Agencies Corporate 26% 25% Non resident deposits 19% Individuals 30% 32#332015 3 Capitalization Levels - 30 June 2019 Summary Total equity at QAR 20.6bn up by QAR 0.6bn from Q4 2018, due to: Increase in retained earnings by QAR 0.3bn on account of profits of H1 2019 adjusted by the dividends payment of 2018. Increase in fair value reserves by QAR 0.4bn. Capital Adequacy Ratio at 16.3% (Basel III) Total equity (QAR million) Reserves AT1 ■Equity 21,021 19,999 I 19,365 20,589 19,301 17,299 Dividend distribution per share (QAR) ■Cash dividend 1.5 1 0.5 2016 2017 2018 ■Bonus shares Capital Adequacy Ratio (Basel III) 2015 2016 2017 2018 H1 2018 H1 2019 Min ratios 2018: CET1 9% Tier1 11%, Total Capital ratio 14% 9.9% 13.5% 11.8% 2015 2016 9.7% 15.2% 13.1% 11.2% 14.5% 16.1% CET1 Tier1 9.7% 13.0% 14.5% 2017 H1 2018 H1 2019 ■Total Capital ratio 11.0% 16.30% 14.5% 33#34QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#35Commercial Bank Financial Performance - Half year ended 30 June 2019 (Domestic) Profitability Balance Sheet QAR Million H1 2019 H1 2018 % QAR Million H1 2019 H1 2018 % Net interest income 1,069 1,110 -3.7% Total assets 123,896 120,914 2.5% Non-interest income 514 478 7.5% Loan & advances 73,669 74,045 -0.5% Total costs 422 458 -7.9% Securities investments 21,073 18,987 11.0% Net provisions 313 366 -14.5% Customers' deposits 67,225 64,423 4.3% Net profit 849 764 11.1% Total equity 20,531 19,686 4.3% Performance Ratios ROAE (Consol) ROAA NIM Capital H1 2019 H1 2018 9% 7.5% QAR Million RWA (QAR million) H1 2019 H1 2018 92,942 97,996 1.4% 1.2% CET 1 ratio 11.4% 10.1% 2.2% 2.2% Total Capital ratio 16.1% 14.3% 35#36Commercial Bank - Standalone Qatar Operations Strategy Rights issue of QAR1.5 bn in Q1 2017 in order to strengthen core capital Additional Tier 1 issuance of QAR2 bn in Q1 2016 to a government entity in order 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 24 months. 36#37Empty#38Alternatifbank Results - Half year ended 30 June 2019 Alternatifbank of Turkey Net profit after tax at TL 99m v TL 77m in H1 2018 Operating income up by TL 158m v H1 2018 Operating expenses up by TL 19m v H1 2018 Total Loan losses up by TL 100m v H1 2018 Loan book up to TL 17.7bn v TL 16.5bn in H1 2018 Customers' deposits up to TL 15.3bn v TL 13.4bn in Q1 2018 CB injected USD 50 million capital into Alternatif Bank 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 117 96 77 99 49 2 Assets Cash and Balances with Cetral Bank Due from banks Loans and advances to customers 2015 2016 2017 2018 H1 2018 H1 2019 Total Investments Other Assets Net operating income (TL million) Non-interest income Total Assets Liabilities & Equity H1 2019 H1 2018 491 333 (188) (169) (178) (78) 125 86 (26) (9) 99 77 H1 2019 H1 2018 3,026 2,799 3,651 1,879 17,748 16,426 3,618 2,832 2,103 1,829 30,146 25,765 Net interest income Non-interest income to net operating income (%) 27% 4% 29% 35% Due to banks Customers' deposit Other borrowed funds 607 1,204 15,345 13,419 10,678 8,507 19% 9% Other Liabilities 1,126 1,199 Shareholders Equity 2,391 1,436 Total Liabilities and Equity 30,146 25,765 * 2015 2016 2017 2018 H1 2018 H1 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 have injected USD 100m of capital in 2018, USD 50m in 2019 and have an intention to inject an additional USD 150m into Alternatifbank over the next 2 years. 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 32% Services 28% Trading 15% Contractors 15% Real Estate 2% Others 8% 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 Loan book breakdown by currency 30 June TRY FCY 52% 48% Tighten exchange control regulations 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 banks is the 3rd largest bank by total assets in Oman at USD 9bn as at 31 March 2019 As at 31 March 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 Half year ended 30 June 2019 National Bank of Oman (NBO) Net profit after tax at OMR 25m, remains constant from OMR 25m in H1 2018 Net operating income OMR 64m, remains constant from H1 2018 Net interest income up 1% to OMR 46.3m Non-interest income increased 3% to OMR 18m Net provisions OMR 3m, down by 9% from H1 2018 ◆ Loan portfolio Increased by 6% at OMR 2.8bn v H1 2018 Customers' deposits up by 0.1% from Q1 2018 United Arab Bank (UAB) NBO Performance (OMR million) Operating Income ■Profit 136 136 132 129 60 64 56 64 51 44 25 25 2015 2016 2017 2018 H1 2018 H1 2019 UAB continues to be an asset held for sale in Q2 2019. 41#42QATAR IN PERSPECTIVE COMMERCIAL BANK: SUMMARY HIGHLIGHTS CONSOLIDATED FINANCIAL HIGHLIGHTS & PERFORMANCE STANDALONE FINANCIAL PERFORMANCES ➤ APPENDIX#43Group Financial Performance - Half year ended 30 June 2019 in US$(1) Group Profitability Consolidated Balance Sheet USD Million H1 2019 H1 2018 % USD Million H1 2019 H1 2018 % Net interest income 335 365 -8.3% Total assets 38,816 38,430 1.0% Non-interest income 173 138 24.8% Loan & advances 23,309 23,955 -2.7% Total costs 152 171 -11.1% Financial investments 6,414 5,963 7.6% Net provisions 118 120 -1.8% Customers' deposits 21,127 20,636 2.4% Associates income 23 24 -2.3% Total equity 5,656 5,320 6.3% Net profit after tax 257 235 9.2% Performance Ratios Capital H1 2019 H1 2018 USD Million H1 2019 H1 2018 ROAE ROAA NIM 9.0% 8.5% RWA (QAR million) 30,817 32,874 1.3% 1.2% CET 1 ratio (Basel III) 11.0% 9.7% 2.1% 2.3% Total Capital ratio (Basel III) 16.3% 14.5% (1) QAR/USD = 0.27; pegged exchange ratio of as of 30 June 2019 43