By Satish Kanady
DOHA: Powered by an increasing public sector spending, banks in Qatar witnessed the highest rate of loan growth in the GCC in third quarter of this year. The loan book of Qatar-based banks grew 25.4 percent during the third quarter.
The acquisition made by some Qatar banks during the year also helped drive the country’s loan growth considerably during the period. Among the banks in Qatar, Commercial Bank of Qatar and Qatar National Bank (QNB) registered higher growth in loan book of 34.0 percent year-on-year (Y-o-Y) and 27.4 percent Y-o-Y, respectively.
Due to strong growth in loan book, the net interest income (NII) of GCC banks rose 10.2 percent YoY. The region’s NII growth was led by Qatar-based banks, 25.3 percent, followed by UAE and Saudi Arabia. Among Qatar-based banks, QNB witnessed a robust growth of 28.1 percent YoY in NII, mainly driven by consolidation of the bank’s Egypt-based subsidiary National Societe Generale Bank-Egypt (NSGB). Masraf Al Rayan’s NII rose 35.3 percent due to a 26bps improvement in net interest margin (NIM). Commercial Bank of Qatar reported 39.1 percent YoY growth in NII due to 24bps YoY growth in NIM, the Global Investment House’s (GIH) GCC banking sector quarterly review noted yesterday.
During the quarter, the overall operating expenses of the banks covered by the GIH grew by 15.1 percent Y-o-Y to $3.1bn, primarily driven by Qatar (37.4 percent Y-o-Y) mainly due to acquisition and branch expansion. Cost to income ratio of the bank increased to 49.3 percent in Q3, 13 from 30.1 percent in a year ago. QNB witnessed a 57.8 percent Y-o-Y growth in operating expenses during the quarter due to higher staff cost post consolidation of NSGB.
Provision expenses of the GCC banks covered by the GIH in the region increased 4.0 percent YoY during 3Q,13, mainly due to significant increase in provisions of Qatar-based banks. During the quarter, the provisions for impaired loans of one of the banks in Qatar grew a whopping 440.5 percent YoY mainly due to provisions taken against emerging market strategic equity investments. Another lead bank in Qatar also registered 66 percent rise in provisions due to growth in its overall loan portfolio after the NSGB acquisition. Amongst UAE-based banks, one bank recorded 60.2 percent and another bank recorded 50.2 percent growth in provisions. In contrast, the provision expenses of Saudi Arabia and Kuwait banks declined 16.1 percent and 4.5 percent, respectively, on YoY basis due to improved asset quality. On quarter-on-quarter (Q-o-Q)basis, provisions of GCC banks increased 11.7 percent led by Saudi and UAE.
Qatar-based banks witnessed the strongest growth in total assets with 22.4 percent YoY to $201.5bn, followed by banks in Kuwait (14.3 percent). Expansion in asset base was supported by double-digit growth in loan book. However, on a Q-o-Q basis, asset growth was sluggish due to marginal increase in loan book. Among the individual banks, Commercial Bank of Qatar led with a 37.9 percent Y-o-Y growth in asset base in the region.
The Peninsula
