DOHA: There has been an 18 percent drop in personal loan disbursal by banks in the first eight months of this year due to stricter lending norms imposed by the banking regulator.
The setting up of a centralized credit bureau by the Qatar Central Bank (QCB) to assess the creditworthiness of potential borrowers, also seems to have contributed to the drop, says the QNB Group.
The public sector has, on the other hand, been the main driver of loan growth during the period (January to August this year) as lending to this segment (read: government and quasi-government agencies) rose a massive 35 percent to QR201.3bn ($55.3bn).
The sector’s share in the total credit dispensed by banks was 22 percent five years ago (in 2007) which almost doubled to 42 percent until August this year.
Financing of large capital investments in developing the country’s infrastructure has been the key driver of the public sector’s loan growth, a QNB Group press statement said yesterday.
The statement added that state agencies and semi-state agencies as well as large corporate entities are expected to continue to be the main driver of loan growth given the country’s massive development program.
However, while the banking sector in several countries across the globe continues to face difficulties, Qatar’s banking industry continues to maintain its growth momentum across a range of performance indicators, while at the same time maintaining good asset quality, according to QNB Group analysis.
The overall assets of banks in Qatar grew 10.7 percent during the year up to August this to QR772.6bn ($212.2bn), compared to QR698bn ($191.8bn) in 2011, according to the latest data by the Qatar Central Bank. Asset growth was driven mainly by the increasing loans that grew by 18.5 percent to QR479.7bn ($131.8bn) for the sector.
Loans to the real estate and construction sectors increased 10.2 percent during the year up to August (2012), as activity in this sector continues to pick up.
The services sector has witnessed the most rapid increase during the year 2012, and has more than doubled its outstanding loan amount from QR30.3bn as at year-end 2011, to QR74.5bn as at August 2012. The main borrowers in the services sector have been air transportation, sea transportation and hotels.
Consumer, or retail, loans declined 18.0 percent in the year up to August 2012. The QCB regulation issued in April 2011 on retail lending caps have been one of the key factors limiting loans to this segment.
The QCB has also established a credit bureau. Although the retail lending caps may have restricted lending, they have been effective in keeping the NPL (non-performing loans) ratio low and will support long-term sustainable growth.
The QCB has also recently announced plans to establish a credit rating agency for domestic non-government entities, which will be a joint initiative along with Qatar Holding. While the initiative is primarily aimed at debt issuance and further developing the capital markets, it will also improve the availability of information for banking sector credit assessments.
On the funding side – Qatar’s banking sector deposits grew by 15.7% during the year up to August 2012, to reach QR420.6 bn. Public Sector deposits increased by 17.3% during the year and accounted for 35% of overall deposits, while Private Sector deposits went up by 17.2% for the year and accounted for 61 percent of overall deposits.
While the funding profiles of banks remain largely derived from customer deposits, increasingly banks are turning to the capital market issuing long-term debt instruments. A recent example is QNB’s $1.8bn syndicated facility with a three year maturity that was completed in August.
Given the preference of customers in Qatar and the region for placing deposits on relatively short maturity, accessing the capital market benefits financial institutions in several ways through widening and diversifying their investor base and lengthening the maturity profile of their liabilities, thus better matching the maturity profile of their loans.
A key measure of the performance of the banking system is the quality of its assets, given the impact on the bottom line stemming from impairments on the loans and investment portfolios. In this regard, the Qatari banking system is well positioned with the overall NPL ratio declining to 1.7 percent in 2011, from two percent in 2010, which is among the lowest in the region.
Meanwhile, a look at Qatar Exchange listed banks profitability data for the first half of 2012 shows a growth by 12.9 percent, over the same period in 2011.
The Peninsula
