Satyendra Pathak
doha
The total assets of Qatar’s banking sector grew by QR37.6 billion year-to-date (January to October 2024), reaching QR2.007 trillion, according to a report published by QNB Financial Services (QNBFS) on Wednesday. This growth was primarily driven by domestic credit, which contributed QR65 billion during the period.
However, October 2024 saw a slight month-on-month (MoM) decline of 0.9 percent in total assets, reflecting mixed performance across key indicators such as loans, deposits, and liquidity.
The banking sector’s loan book expanded by 0.9 percent MoM in October, marking a robust 5.7 percent growth for the year. Public sector loans were the primary driver, increasing by 2.3 percent MoM and 8.7 percent in 2024.
Within this, government loans surged by 7.8 percent MoM (+17 percent in 2024), while loans to government institutions edged up by a marginal 0.1 percent MoM (+6.7 percent in 2024). Semi-government institutions, however, saw a decline of 0.9 percent MoM (-9.1 percent in 2024).
The private sector loan book grew modestly by 0.3 percent MoM (+3.8 percent in 2024), led by general trade loans, which rose 1.6 percent MoM (+5.3 percent in 2024). Service-related loans also increased slightly, up 0.4 percent MoM (+4.3 percent in 2024).
However, consumption-related loans dropped by 0.8 percent MoM (-0.8 percent in 2024), and real estate loans fell by 0.3 percent MoM (+8.5 percent in 2024). Loans outside Qatar saw strong growth, rising by 1.1 percent MoM and a significant 15.2 percent in 2024.
Deposits in the sector dropped by 0.8 percent MoM in October, although they registered a 5.3 percent increase year-to-date. Public sector deposits declined by 2.1 percent MoM but remained up 8 percent for the year.
Notably, government institution deposits, which represent 54 percent of public sector deposits, fell sharply by 4 percent MoM. Conversely, semi-government institution deposits grew by 3.1 percent MoM but recorded a yearly decline of 10 percent.
Private sector deposits posted a modest gain of 0.6 percent MoM (+1.8 percent in 2024), driven by a 1.5 percent MoM increase in deposits from companies and institutions. Non-resident deposits also dropped by 1.8 percent MoM but were up 9.3 percent for the year, comprising 18.8 percent of total deposits as of October 2024, reflecting continued reliance on external funding.
The sector’s liquidity position weakened slightly, with liquid assets to total assets falling to 29.3 percent in October from 30.3 percent in September. Loan provisions remained steady at 4.2 percent of gross loans, reflecting consistent provisioning for stage 2 and stage 3 loans, primarily from the contracting and realestate sectors.
Return on equity (RoE) for the sector dropped to an annualised 11.2 percent as of October, compared to 14.9 percent at the end of 2023. Lower RoEs generated by Masraf Al Rayan and Doha Bank weighed on the overall performance, while QNB Group and Qatar Islamic Bank continued to deliver strong double-digit RoEs.
With loan growth outpacing deposit inflows, the sector’s LDR rose to 131.1 percent in October, up from 128.9 percent in September. This reflects the tightening balance between loans and deposits, highlighting potential liquiditypressures.
The Qatar banking sector’s performance in October 2024 underscores its resilience amid challenges, driven largely by robust public sector loan demand. The strong domestic credit growth year-to-date has been pivotal in supporting asset growth. The sector’s ability to balance growth, liquidity, and profitability will be pivotal in sustaining its momentum moving forward.
