DOHA: Qatar’s top banks delivered a combined net profit of a solid QR12bn for the first half of 2018, up 10.6 percent compared to QR10.85bn reported during the same period a year ago. Among the largest eight banks, QNB led the pack by recording QR6.65bn net profit or 6.67 percent up from H1, 2017, Qatar Stock Exchange (QSE) disclosed.
The Commercial Bank, which delivered QR855m in net profit, recorded an impressive 376.1 percent year-on-year growth. While the Islamic lender QIB posted 13.75 percent growth, the net profits of other two Islamic banks Masraf Al Rayan and QIIB grew by 4.5 percent and 4.02 percent, respectively.
Qatar banks asset quality indicators will stabilise or deteriorate slightly for 2018 barring any significant disruption to the banks; operating conditions that could come from geopolitical risks. Cost of risk will trend toward normalised levels because of IFRS 9 implementation during 2018, though real estate and hospitality sectors are under pressure in Qatar, according to market analysts. The banks’ combined assets (and liabilities) rose by 6.6 percent in June from a year ago. Bank deposit growth, at 3 percent year-on-year in May, is also on the rise, having benefitted from public sector liquidity injections.
Qatar’s growth momentum is being supported by bank earnings that have benefitted from steady oil and huge spending in the run up to FIFA 2022. Qatar’s economic growth is projected to edge up in 2018 to 1.7 percent year-on-year, before accelerating to 2.2 percent in 2019.
Economic activity will benefit from output gains in both the hydrocarbon and non-hydrocarbon sectors, with the former witnessing an expansion in crude and LNG production and the latter benefitting from the government’s $200bn infrastructure spending programme.
“Growth has accelerated every month this year, reaching 10.7 percent y/y in May, led by a broad-based uptick in demand for credit from the consumption, general trade, services and real estate sectors. And this is despite a general rise in the cost of borrowing, although the QCB has raised its benchmark QMR lending and repo rates”, NBK analysts said recently.
According to S&P Global Ratings, Qatar banks’ fall in nonresident deposits and inter-bank placements has been offset by liquidity injections by Qatar Central Bank (QCB) and repatriation into the domestic banking sector of about $40bn of public sector assets.The deposit outflows have stabilised to a manageable level. This somewhat reduces the likelihood that the banks would need substantial additional government support.
The ratings agency expects Qatar’s liquid external assets to continue to offset the country’s stock of debt by a reasonable margin. However, Qatar’s gross external financing needs remain sizable, owing to the share of short-term external funding in Qatar’s large banking system.
