Doha Bank CEO Dr. R Seetharaman
Doha: Growth in commercial banks’ deposits and credit expansion in August 2020 reflect that Qatari economy is robust and resilient despite the challenging environment. The year-on-year increase in banks assets and credit growth show that the financial and economic stability is in “reasonable shape”, noted an industry expert.
Qatar’s fiscal and monetary stimulus initiatives, special concessional advantages, which include the financial and economic incentives of QR75bn for the private sector, helped re-bounding the growth momentum.
The commercial banks in Qatar witnessed 7.4 percent year-on-year jump in total deposits to QR871.34bn in August this year compared to QR811.2bn recorded in August 2019, according to the Qatar Central Bank (QCB) data.
“The year-to-date (YTD) comparison is more relevant. If you look at the banks’ total asset, it has grown by 5.99 percent in August 2020, and when it comes to credit expansion, it has grown by 6.24 percent. It has grown because almost every sector has witnessed growth,” Doha Bank CEO Dr. R Seetharaman told The Peninsula, yesterday.
Referring to latest official data, Dr Seetharaman explained how the local banking sector witnessed credit growth despite the challenging environment due to the COVID-19 pandemic. He added: “The government sector has grown by 3.92 percent. Similarly the real estate sector surged by3.35 percent, consumer spending has registered 3.57 percent growth, and the contracting sector has also witnessed a growth of 9.37 percent. The trading and services sectors have also seen double-digit growth of over 11 percent each. All these factors are contributing to the overall credit expansion and economic growth.”
He reiterated that the Qatari economy is holding good in terms of overall credit expansion. When it comes to deposits, customer deposits are up 2.6 percent, including local and foreign currencies. “It is reasonable. Looking at the single digit contraction in the economy, credit expansion is still happening for many-many reasons because Qatar’s fiscal and monetary stimulus initiatives, such as postponing the loan installments and interests and special concessional advantages extended to small and medium-sized enterprises (SMEs) from QDB.”
Dr Seetharaman, a leading banker and also an expert of the local and global economic outlook, said that most of the key projects in Qatar are being implemented as planned. “Even though you look at the fiscal terms like 16 percent expenditure cut in terms of the project space, that is only for the ‘nice to do projects’, not for the ‘must do projects’.”
He further explained that business is not severely impacted. Retail sector growth has been marginal, credit growth is expanding. The growth momentum in productivity is still on, both in the hydrocarbons and non-hydrocarbons sectors. So the numbers from the banking industry such as bank deposits and credit expansion reflect that the economy and financial stability is in reasonable shape.
According to QCB’s latest monthly statistics on its website, the domestic deposits of the commercial banks grew about 6.9 percent to QR657.01bn, which is 75.4 percent of the total deposits at the end of August 31, 2020.
The commercial banks’ domestic private sector deposits grew 7 percent to QR387.6bn, which constituted nearly 59 percent of the total domestic deposits; public sector deposit increased by 6.8 percent (y-o-y) to QR269.40bn. When compared on monthly basis, the public sector deposit declined by 1.9 percent to QR269.405bn in August 2020.
