Global credit rating agency Moody’s has upgraded its outlook on the Qatar’s banking sector to “stable” from “negative” as the pandemic challenges recede.
“This reflects our view that operating conditions for the banks have stabilized as the challenges of the pandemic and low oil prices reverse, and the economy recovers,” the rating agency said on its report.
Heightened tourism activity surrounding the FIFA World Cup to be held in Qatar in 2022 would also support the economy, it said.
The banks’ loan performance remains strong despite some of the lenders having operations in countries with weaker economic conditions.
“The banks are well capitalized and we expect profitability to improve as higher interest rates boost income, but remain below pre-pandemic levels,” it said, adding domestic deposits are expected to grow, driven by higher oil prices.
The agency emphasized the support of the wise regulatory control environment, and that in addition to the lending process to the low-risk Qatari government and semi-governmental institutions, local deposits are growing, with non-performing loans continuing to remain at low levels, as well as her expectations of improving financing conditions supported by high oil prices and an increase in local deposits, pointing to the growth that Credit achieved from 35 percent in 2019, to 39 percent in 2021.
Moody’s indicated the high rate of liquidity coverage in Qatari banks, which exceeds 100 percent, in addition to the high capital adequacy ratio to 19.7 percent last year, liquid assets are expected to remain strong and stable at 24 percent of total assets, with improved net income for tangible assets backed by robust efficiency.
