A man crosses Grand Hamad street where banks and financial institutions are located in Doha (Reuters)
DOHA: Most banks in Qatar are increasingly confident of the financial stability of the country’s banking system.
Participating in QCB’s ‘Risk Perception Survey-2018’, more than 90 percent of banks expressed that their confidence in the financial stability of the banking sector has increased from a year ago.
The survey suggested that overall credit risk either decreased or remained the same in 2017 as opined by more than 50 percent of the banks. However, a large percentage of banks said an increase in credit risk in 2018, but would lower again in 2019.
Systemic risk and market risk may decline in 2018 and 2019 as opined by a majority of banks. As regards to liquidity risk, a higher percentage of banks believe the reverse for 2018. However, more than two third of the banks opined the risks from liquidity will reduce in 2019.
The survey also sought the banks to rank the key global and macro-economic risks factors that have impacted Qatar financial system from a given list of major vulnerabilities. Geopolitical issues is considered as the major risk as opined by a good majority of banks in 2017.
They also believe that the risk level from this vulnerably may continue in current year as well. Risk from lower oil prices which came as the top most risks in the last year survey is expected to be reduced in the coming years.
All other risk events are considered to have comparatively lower significance by the respondents.
The survey also captured banks’ perception on the major risk events from the given set of events pertaining to credit, liquidity, market and operational risks. 60 to 80 percent of the banks opined, they consider risk from real estate developers/contractors as the major risk from the given list of credit vulnerabilities.
However, a majority of banks responded that risk level will decrease or remain the same in 2019.
As regards to liquidity and market risk, banks opinion differs in choosing the top most risk. Increase in vulnerability on account of on ‘reduced liquidity flow from international’ may increase in 2018 as said by a large number of banks.
Meanwhile the QCB’s latest edition of FSR noted the liquidity indicators, improved in 2017, indicating an ease in liquidity pressures amidst large withdrawal of deposit liquidity from the Non-resident depositors.
“A large volume of volatile liquidity seems to have gone out of the banking sector facilitating the sector to streamline its funding structure….With higher inflow of domestic deposit, loan to deposit ratio improved substantially during the year. Thus, various measures of liquidity risk indicate, risk levels declined in 2017”, the QCB document noted.
