The Islamic banking and finance sector in Qatar is witnessing a continuous development helped by supportive policies and regulations.
Qatari Islamic banks are likely to see their market share grow further in 2021, said Fitch Ratings in a report released recently. Islamic banks continued to grow faster than conventional banks in 2020 (10.9 percent versus 6.8 percent), reaching 24.2 percent of sector assets at year-end, as per Fitch Ratings.
According to a report on Islamic finance in Qatar released by Bait Al Mashura Finance Consultation released earlier this year, assets of Islamic banks grew in 2020 by 8.4 percent, and deposits grew by 8.7 percent, with the private sector’s deposits accounting for 56 percent. It is also noticed that non-resident deposits came back and exceeded pre-crisis rates of 2017. Financing grew by 7.9 percent, concentrated in government, semi-government, real estate and personal finance sectors. During the period 2016 – 2020, the compound annual growth rate for the assets of Islamic banks amounted to 6.9 percent, compared to 5.6 percent for conventional commercial banks.
The banking sector in Qatar includes four Islamic banks out of seventeen banks, including five conventional domestic commercial banks, a specialized bank (Qatar Development Bank), and seven branches of conventional foreign banks, in addition to a representative office for a foreign bank.
Qatari Islamic banks operate through a network of internal and external branches of more than 70 branches and offices. These Islamic banks account for more than a quarter of the market share of Qatar banking sector. These banks are also rated among world’s largest Islamic banks. Islamic finance sector has shown flexibility and solidity in facing COVID-19 repercussions in light of the sector’s great digital transformation.
According to the report of Bait Al Mashura Finance Consultation, in 2020, the total assets of Islamic finance in Qatar amounted to approximately QR528bn, of which Islamic bank assets accounted for 86 percent, existing Sukuk accounted for 12 percent, assets of Takaful insurance companies accounted for approximately 1 percent, and assets of investment funds and other Islamic financial institutions accounted for approximately 1 percent.
In Takaful insurance sector, the assets of insurance policyholders amounted to QR2.2bn. Insurance subscriptions amounted to QR1.3bn, with a marginal decrease of 0.1 percent. Due to the decrease in insurance claims as a result of lock-down, closure and restriction of public movement, insurance surpluses increased in these companies to reach QR149m. Assets of Islamic finance companies reached QR2.6bn. Business results of Islamic finance companies varied between profits totaling QR61m and losses amounting to approximately QR3m. The Islamic finance and banking sector will growth further in coming years driven by strong consumer demand and government’s supportive policies.
