DOHA: The lending patterns of banks here have been changing with real estate emerging as a key borrower, pushing the banking industry’s all-time favourite personal loans segment to the number two spot.
Consumer loans might still be easier to access from banks, but official figures show that real estate was the top borrower in 2011, thanks to a mix of factors, prominent among them being the rapid urbanisation process being witnessed in the country.
Consumer loans given away by banks totalled an impressive QR67.97bn ($18.62bn) last year, but that was not enough to beat the borrowing of the fast-paced real estate sector — a massive QR76.22bn ($20.88bn).
Interestingly, personal loans were the top segment in terms of borrowing volumes in the previous years, with their share in the total being QR56.73bn ($15.54bn) and QR53.23bn ($14.58bn) in 2010 and 2009, respectively, figures released by the Qatar Central Bank (QCB) reflect.
Credit to the real estate sector has witnessed a phenomenal growth over the past few years, from a mere QR6.2bn ($1.69bn) in 2005 to a hefty QR76.2bn by 2011-end, the banking regulator said in its annual report for 2011. The increase has been more than 12 times over six years.
Factors related to urbanization, development of existing projects, besides Qatar’s successful bid for the coveted 2022 FIFA World Cup, the QCB said in what it added was its 35th annual report.
“The subsequent positive sentiments have played a key role in the robust growth that has been witnessed in the real estate sector.”
The growth in credit dispensed to the real estate sector last year was an incredible 49.3 percent over 2010, whereas the consumer loans segment witnessed an increase of only 19.8 percent.
Two key sectors — industry and contracting — suffered as lending to these segments declined in 2011 over the previous year. The decline was quite sharp at almost 12 percent in the case of the contracting sector. Credit to this segment totalled QR16. 22bn ($4.44bn) in 2011, while it was QR18.41bn ($5.04bn) the previous year.
Total domestic credit dispensed by banks in the country stood at a whopping QR376.69bn ($103.2bn) in 2011, showing an increase of QR82.77bn ($22.67bn). The growth was only QR42bn ($11.50bn) the previous year (2010).
The relative share of credit facilities in foreign currencies to the total credit facilities granted within the country rose from 19.5 percent in 2010 to a high of 45 percent by last year-end.
The QCB said this was due to the fact that the demand for credits in foreign currencies within the country was quite high last year due to what it added was changes in the interest rate differentials. Or, in other words, credits in foreign currencies were less expensive than credits in the local currency.
THE PENINSULA
