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DOHA: Although flush with funds, banks here seem to be treading with caution in giving away personal loans as figures suggest a considerable drop in consumer lending by the industry, particularly during August and September last year.
Also, official data reflect a yawning gap between bank deposit rates and the interest they charge on credit dispensed, but that, luckily for the sector, doesn’t appear to be affecting the volume of at least private sector deposits.
Consumer lending by banks fell from an impressive QR73.45bn ($20.12bn) in July of 2012 to QR55.76 ($15.27bn) and ($15.34bn) in August and September — a significant drop of almost $5bn.
That was the volume of personal lending witnessed during 2008, 2009 and 2010 when the population of the country was far too less and banks pursued a conservative lending policy following the global financial crisis, especially during 2009-10.
Statistics released by banking regulator, the Qatar Central Bank (QCB), in its quarterly bulletin (September 2012) suggest that lending to the booming real estate sector has been growing at a steady pace ahead of an expected launch of a slew of development projects.
Total credit dispensed by the banks to the private sector until the end of the third quarter of last year stood at QR244.76bn ($67.05bn), up from QR227.52bn ($62.33bn). Bank deposit rates continue to be low since almost 2007 and they seem to have plummeted further in 2011 and 2012 (during the first three quarters).
Interest on savings deposits touched its nadir in recent history to less than one percent (0.94) at the dawn of 2012 but improved as the year progressed, to 1.14 percent by the end of September.
Margins on one-month deposits were almost in the same range, sliding marginally from 1.59 percent in January 2012 to 1.31 percent at the end of the third quarter. The interest rate for three-month deposits fell from a high of 4.33 percent in 2007 and 3.2 percent in 2009 to 1.6 percent on average last year — a trend that began in 2010.
Similar was the situation with six-month and one-year deposits, while deposits for more than a year attracted a slightly better rate of 2.23 percent by September-end.
Interest margins on loans varied from five to almost six percent depending on their tenure. The margins on car loans rose to 6.12 percent in September, up slightly from 5.98 percent the previous month. Credit cards carried higher interest at 11.32 percent in September, showing a rise from 9.14 percent just two months previously, in July.