Al Khalij Commercial Bank (KCBK) reported a net profit of QR109.2mn in 1Q2014 (vs. our estimate of QR125.4mn), dropping by 28.5% and 16.9% QoQ and YoY, respectively. Weak QoQ results were due to muted investment income (QR9.1mn vs. QR43.4mn in 4Q2013). The bank’s net interest income grew by 12.4% QoQ (+6.7% YoY) to QR165.9mn. Fees and commissions grew by 11.3% QoQ (down 20.0% YoY) to QR37.8mn. On the other hand, operating expenses increased by 5.0% and 7.3% QoQ and YoY, respectively to QR104.5mn. As such, the cost-to-income ratio deteriorated to 48.9% in 1Q2014 vs. 40.7% in 4Q2013 (42.1% in 1Q2013). The YoY drop in profitability was mainly due to a sharp drop in fees and commissions (down 20.0%) and muted investment income. KCBK’s loans and deposits expanded by 10.9% and 8.8% YTD, respectively. Thus the LDR rested at 106% vs. 104% at the end of 2013, according to Qatar National Bank Financial Services (QNBFS)