Banking sector in Qatar has fully recouped from the initial glitches caused by the economic blockade by the neighboring countries. Strong macroeconomic environment, supported by marginal but stable real economic output, higher capital account surplus, benign inflation, improved fiscal balance, partial recovery in oil prices etc., ensured the required encouraging operating environment for the banking sector, noted by Qatar Central Bank’s 10th Fiscal Stability Report released yesterday.
The QCB’s annual document said demonstration of resilience to the economic blockade by the banking sector facilitated it to regain the confidence of the international investors. The year 2018 also witnessed major credit rating agencies upgrading the banking sector outlook from negative to stable. Non-Resident deposits, which experienced withdrawal pressure in 2017, rebounded in 2018.
Banking sector considerably reduced their geographical risk by well diversifying the regions from which they sourced the deposits. The maturity structure of the funded liability also improved where as banks could mobilise more long-term maturity funds in 2018 thereby reducing the volatility risk to a greater extent.
The banking sector assets averaged around QR1.38 trillion in 2018, recording a substantial growth of around 5.6 percent though the pace of growth slowed over previous year. The moderation of growth in assets is attributed to the decline in credit demanded by the public sector entities.
Along with the moderation in the size of the balance sheet, banking sector’s credit and deposits also grew at a slower pace. Average credit during the year grew by 4.6 percent while average deposit grew by 3.4 percent in 2018.
In the first quarter of 2018, asset grew comfortably well, however, the pace of growth slowed in the rest of the months. This slow pace of growth in assets is reflected by the lower growth in credit during the last nine months of 2018. Lower credit in the last quarter, appears to have triggered the decline in deposit towards the end of the year.
On the SME sector’s access to finance, the QCB document noted development of SME sector received a boost after the economic blockade. The public private partnership (PPP) initiatives by the government with an aim to achieve economic diversification provided the required momentum for the development of the sector. QDB was entrusted with the responsibility of developing and supporting SMEs in the non-hydrocarbon sector.
QDB offered all kinds of possible support under a wide range of products and services, to establish and promote such businesses, which include provide easy access to financing. ‘Single window’ initiative, which allows investors quick access to all the needful facilities to own a factory within 72 hours played a significant role as the potential investors receive the licenses and other facilities such as land plots and financing through QDB very quickly.
