Doha: The value of accepted credit applications for lending to small and medium-sized enterprises (SMEs) amounted to QR20.6bn in 2017, registering a growth of 71 percent from QR12.7bn in 2016.
This was revealed in a report issued yesterday by Qatar Development Bank in cooperation with the Qatar Central Bank on the “status of lending to SMEs in Qatar 2017”.
The report, which is the first of its kind, pointed to the presence of more than 4,000 SMEs that resorted to banks for multiple banking services in 2017. Small-sized companies represented 44 percent, 29 percent of which were smaller companies and 27 percent were medium-sized companies of the SMEs that applied for banking services during the last year.
Medium-sized companies accounted for about 73 percent of total credit applications, followed by small companies by 24 percent, while smaller companies accounted for only 3 percent. The report pointed out that the accepted credit applications improved in 2017 as the proposition of the accepted credit applications was about 92 percent of the total orders submitted by SMEs to banks, compared with 2016, which registered an acceptance rate of 80 percent.
The report’s data showed that medium-sized companies have the highest rates of credit applications acceptance, amounting to about 95 percent, followed by small and then smaller companies by about 90 percent and 89 percent, respectively.
On the share of SMEs in the private sector credit market, the report showed a remarkable improvement in the share of these companies, accounting for about 4.3 percent of total private sector credit in 2017, up from 2.8 percent in 2016.
The sectoral analysis of credit applications showed that SMEs operating in the trade sector accounted for the largest share of credit by 37 percent, followed by the services sector by 27 percent and construction by 18 percent.
The services sector’s share of credit has grown from 8.6 percent in 2016 to about 27 percent in 2017. The share of SMEs in the industrial sector has grown from 3.3 percent in 2016 to about 15 percent of credit in 2017.
The reasons for credit applications in 2017 were concentrated by SMEs for the purpose of growth and expansion of 49 percent, followed by capital financing of 19.9 percent. This result is in contrast to the results of 2016, with the purpose of capital financing at the forefront.
At the level of credit products, there has been an increase in the number of credit applications from some products such as a loan for bills and restructuring of current loans, while demand for other products such as car and machinery financing and restructuring of overdrafts declined.
Small-cap companies have the lowest rate of non-performing loans at 4.1 percent compared to SMEs, which accounted for 5.9 percent and 5.1 percent, respectively. QDB said that the report was based on data collected from banks operating in Qatar that provide credit services to SMEs. It also relied on the unified definition of SMEs issued by Qatar Central Bank, to be applied by the banks in 2016.
This report provides a summary of the most important information on SME financing within the banking sector for 2017. It aims to identify the status of bank financing for SMEs in Qatar in terms of their share in financing, the rates of acceptance of credit applications, the purpose of the request for financing, and the rates of non-performing loans.
It is expected that this report will continue to be the first of its kind on an annual basis to identify the development of the banking finance situation for SMEs. This is part of the attention given by the government to this group of companies. The State is working to overcome the obstacles faced by these companies, not only at the level of funding but at other levels as well.
