DOHA: Amid a series of challenging operating environment, Qatar’s banking sector continued its healthy performance in 2017. The Qatar Central Bank’s Financial Stability Review (FSR) 2017 released yesterday noted the country’s sector continued to portray sound, liquid and profitable stability indicators in 2017.
Banking sector assets (average) recorded a growth of 12.1 percent in 2017, higher than the growth registered in 2016. Growth in average assets was manly supported by credit which posted an average growth of 11.7 percent.
Public sector credit demand which averaged around 21.7 percent provided the impetus for double digit growth, while the average credit demand from private sector stood at 6.8 percent. At the same time deposit surpassed the credit growth. Growth in deposit averaged around 15.5 percent, almost double than the growth recorded in 2016. Higher deposit growth lowered the loan to deposit ratio to a greater extent.
As in the case of credit, deposit growth was mainly contributed by the public sector, which grew by around 29.9 percent on an average during the year. Monthly data showed, except in December 2017, the year on year growth in assets in assets recorded double digit throughout the year.
Along with the healthy growth in assets, banking sector’s intermediation process continued to be in the growth trajectory. The number of deposit account grew by around 7.8 percent, which number of credit accounts grew by 0.67 percent in 2017.
An analysis of the growth in average assets across bank group showed, domestic conventional banks continue to dominate with higher growth over last year, while Islamic bank group’s growth in asset declined during 2017. In contrast, foreign banks could not sustain the growth recorded in the previous year. The average assets of the foreign banks reduced considerably during the year.
At the end of 2017, banks’ credit growth declined to 8.5 percent from the previous year’s 12.1 percent. Lower credit growth was attributed mainly to the decline in cross-border credit provided to non-resident as well as lower credit growth to the public sector. Public sector credit growth declined from 23.3 percent t in 2016 to 16.2 percent in 2017.
The regional geopolitical issues might have resulted in, banks reducing their exposure to those countries involved in the embargo, the QCB document noted.
“In the wake of the regional geopolitical issues, banking sector has considerably reduced their exposure to the rest of the world.
Consequently, the banking sector cross-border assets declined by 14.9 percent by the end of December 2017. Except for investment, all other earning cross-border assets reduced. Assets with foreign financial institutions reflected major decline among the asset classes”, the document said.
The volume of credit to real estate sector picked up after a decelerated growth in 2016. Strong growth momentum was visible after the first quarter of 2017. In the second quarter, real estate credit growth grew steeply and thereafter, it maintained the growth momentum in the last two quarters of 2017.
