DOHA: Growth in loans and deposits improved in Qatar-based banks in December 2013. Loans climbed by 1.3 percent month-over-month (MoM) and finished up 13.3 percent for 2013. Deposits also expanded by 2.8 percent MoM (+19.7 percent YoY) in December, the monthly banking sector update released by QNB Financial Services noted yesterday.
QNB expects activity in the banking sector to pick up in the coming months.
The banking sector’s loan-to-deposit ratio (LDR) decreased to 105 percent at the end of December 2013 as against 107 percent in November 2013. Going forward, some banks will be issuing Tier 1 bonds. Commercial Bank of Qatar (CBQ) raised QR2bn in Tier 1 notes at the end of December while Doha Bank announced it will be raising QR2bn in Tier 1 bonds in the first quarter this year to improve its capital adequacy ratio (CAR) as well as provide additional funds aiding loan book growth.
Public sector deposits receded by 0.6 percent MoM (+27.3 percent YoY), while private sector deposits gained by 4.5 percent MoM (+20.3 percent YoY). Delving into segment details, the government institutions’ segment retreated by 6.6 percent (+19.2 percent YoY) as against a 1.4 percent increase the previous month.
However, the government segment expanded by 6.6 percent MoM (+53.6 percent YoY) as against a 16.4 percent drop in previous month.
The semi-government institutions’ segment followed the footsteps of the government segment growing by 9.2 percent MoM (+17.3 percent YoY). On the private sector front, the companies & institutions’ segment expanded by 7.3 percent MoM (+15.4 percent YoY) and the consumer segment ticked up by 2 percent MoM (+25.4 percent YoY).
The overall loan book exhibited improved performance in December. Total domestic public sector loans marginally picked up by 0.9 percent MoM after a weak performance in November. On a YoY basis, public sector loans grew by 9.7 percent in 2013. The government segment’s loan book grew by 2.8 percent MoM (+9.3 percent YoY).
On the other hand, the government institutions’ segment declined by 2.5 percent MoM (+9.3 percent YoY). QNB believes public sector loan growth will be the primary driver of the overall loan book in 2014, based on the expected uptick in project mobilisations in the coming months.
Private sector loans ticked up by 1.5 percent MoM (+13.9 percent YoY). The industry segment posted the biggest growth, up 15.8 percent MoM (+24.1 percent YoY), while the ‘Consumption and others’ loan book retreated by 2.4 percent MoM (+10.7 percent YoY). Real estate rebounded 3.0 percent MoM (flat YoY). Specific loan-loss provisioning stood at 1.4 percent of average trailing 12-months’ loan as against 1.4 percent in November 2013.