Qatar’s banking system has proved its resilience time and again. The Qatar Central Bank’s Financial Stability Review (FSR) 2017 released this week has confirmed their strength. The report said that the banking sector continued to portray sound, liquid and profitable stability indicators in 2017.
Country’s ambitious economic diversification strategy facilitated developments of non-hydrocarbon sectors and fostered resilience of the economy against the unjust blockade. Qatar’s economy quickly rebounded from the unjust economic blockade through relocation and realignment of economic activities, enabled by prudent economic policies and a sound financial system.
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.
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. 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.
Qatar’s financial sector, in particular, the banking sector has remained resilient, supported by sufficient capital buffers, low NPL ratio and healthy asset growth. With proactive support from the government and the Central Bank, the financial sector was successful in overcoming the challenges that came on its way..
