Qatar's banking sector has emerged stronger despite exceptional situation created by COVID-19 pandemic. The combined assets of the listed commercial banks have witnessed a growth of around two percent during the first six months of this financial year, according to PwC’s half yearly report Qatar’s banking sector released recently.
The ‘H1 2020 Qatar Banking Sector Report’ said that aggregated total assets of the eight listed commercial banks grew 1.9 percent in the first half of 2020, to hit QR1.66 trillion, while the aggregated loans and advances to customers grew 2.1 percent to reach QR1.44 trillion in the first six months of 2020.
The strong banking sector reflects the strength of Qatar’s economy. The State of Qatar has taken several measures to strengthen banking and other sectors.
Qatar has managed to maintain its high credit ratings with a stable outlook in ratings of global agencies. Moody’s rating agency assigned the credit rating of Qatar in April at (Aa3) with a stable outlook, and classified the economic strength (a1), which is higher than the initial degree (a3), indicating the exceptional rise in per capita income in the country and the great reserves of hydrocarbons.
In its report, Moody’s said that Qatar’s credit profile reflects the government’s strong balance sheet, vast hydrocarbon reserves and exceptionally high per capita income. These factors provide significant shock-absorption capacity and mitigate the vulnerability of government revenue to temporary declines in oil prices.
Moody’s has noted that the stable outlook balances fiscal and economic risks stemming from the decline in oil prices with Qatar’s very large fiscal and foreign currency reserve buffers in the form of sovereign wealth fund assets. The strength of the Qatari economy was also confirmed by the S&P Global Ratings, which affirmed its long-term outlook for Qatar at stable, and its long- and short-term foreign and local currency sovereign credit ratings on Qatar at (AA-/A-1+).
In its report issued in March, the rating agency said that in view of the sharp fall in international oil prices, it has significantly lowered its oil price assumptions for 2020 and 2021. Nevertheless, Qatar’s government and external balance sheets currently remain strong and provide a buffer to withstand external shocks.
It added that while the prices of hydrocarbons may remain low, the government’s fiscal and external positions will remain stable.
S&P Global Ratings expects that Qatar’s credit profile to be stable, supported by the very strong external and fiscal positions, which are underpinned by relatively low central-government debt and the large external assets Qatar has built up over several years.
