Real estate, contracting chew most bank credits

July 07, 2014 - 2:22:51 am

By Satish Kanady

DOHA: Real estate and contracting sectors together make up one of the biggest shares of commercial banks’ total domestic credit facilities in Qatar. The banks’ exposure to the real estate and contracting sectors jointly stood 20.29 percent of Qatar’s total credit facilities, second biggest chunk after the public sector.

Qatar Central Bank’s (QCB) data revealed the country’s commercial banks’ total domestic credits stood at QR547bn by the end of March 2014. The loans to the real estate sector and contracting sectors together accounted for QR111bn, with the real estate having the bigger share of QR85bn, slightly down from QR86bn availed a year ago. 

The commercial banks’ credit to the public sector touched QR246bn during the first quarter of 2014, compared to QR207bn during the same period in 2013. Significantly, the banks’ provisions rose by 24.81 percent to QR10.36bn in March 2014, compared to QR8.3bn in March 2013.

The ratings agency Standard & Poor’s said in May 2014 that Qatar banks’ exposure to the real sector is significant. It noted that there is a slight increase in Qatari banks’ cost of risk because of additional provision on loans to contractors and real estate developers. However, the report reasserted that Qatari banks are the most efficient banks in the region.

The Central Bank data revealed that the QCB’s total assets grew by 13.4 percent in March 2014 on year on year basis. 

The Central bank’s total assets touched QR203bn in the first quarter of 2014 compared to QR179bn recorded during the same period in 2013. 

The QCB’s balance with foreign banks grew by 23 percent on year on year basis. As on March 2014, the bank’s total balance with foreign banks stood QR48bn, compared to QR39bn a year ago. 

The monetary survey of Qatar’s banking system that includes the QCB and the country’s commercial banks, showed the system’s net foreign assets reached QR106.65bn in 2013. The net foreign assets saw a huge surge on year-on-year basis during the month of March 2014. During Q1, 2014 the volume of assets touched QR1176bn compared to QR683.12bn in Q1, 2013, up 72 percent.

The QCB’s total liabilities grew by 12 percent as it jumped to QR946bn in Q1, 2014 from QR843bn recorded a year ago. 

In 2013, QCB’s total liability stood at QR910bn. The Central bank’s international reserves also witnessed a rise during the first quarter of 2014 on year-on-year. 

The reserves rose to QR146.71bn in March 2014 from QR138.92bn recorded in Q1, 2013. The gold reserves reached worth QR2.33bn in Q1, 2014 and the value of foreign securities touched QR94bn.

The Commercial banks’ domestic investment reached QR146bn in 2013. 

As on March 2014, the domestic credit was QR547bn, up from QR533bn in March 2013. However, domestic investments dropped to QR122.99bn in March 2014, compared to a year ago. 

The non-resident deposits of Qatar’s commercial banks declined by 60 percent to QR30bn in the first quarter of 2014 from QR48bn a year ago. 

QCB describes the non-resident as “persons , who usually lives outside Qatar and or who lives inside Qatar for less than one year, despite the nationality of the person.”

The commercial banks’ total deposits reached QR580.99bn in the first quarter, up 19.54 percent compared to QR486bn in the same period of the previous year. The deposits from the private sector also rose 20 percent to QR312bn from QR260bn a year ago.

The Peninsula

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