‘Qatar banks may see higher earnings on robust credit off-take’

Qatar’s commercial banks may see higher earnings this year, mainly on the back of robust credit off-take by the public sector and large corporate houses, according to QNB Financial Services.

“We expect improvement in the public sector, in addition to large corporate loan growth to be the primary drivers of the overall loan book in 2014 followed by the small and medium enterprises (SMEs) and consumer lending,” QNBFS said in a monthly report.

The brokerage house said its views were based on the expected uptick in project mobilisations in the coming months.

The loan book fell by 1% month-on-month (up 5% year-to-date) with public sector credit declining 4.4% month-on-month, it said.

International credit, the primary driver of the month-on-month (M-o-M) growth in June, increased 1.1% (+35.8%YTD 2014), it said, adding total domestic public sector loans declined 4.4% M-o-M and is down 4.2% YTD (year-to-date).

The government segment’s loan book fell 9.3% M-o-M (down 1.8% YTD 2014). Moreover, the government institutions segment (representing about 60% of public sector loans) declined 3.8% M-o-M and is down 9% YTD, the report said.

However, the semi-government institutions segment expanded 2.2% M-o-M (+15.3% YTD). Private sector loans gained 1.1% M-o-M and are up 8.2% YTD.

Consumption and others (contributing near 30% to private sector loans) increased by 3.8% M-o-M (+11.6% YTD). The real estate segment (contributing about 27% to private sector loans) grew 1.2% M-o-M (+0.5% YTD). However, the services segment posted a decline of 3.7% M-o-M but is up 13.8% in the first seven months of 2014. Overall, the contractors (+14.6% YTD) and services (+13.8% YTD) segments are the best performing segments in the private sector YTD.

QNBFS found deposits fell 2.7% M-o-M (+4.9% YTD) in July 2014.

The public sector led the decline in deposits during July 2014 with a fall of 3.8% M-o-M (+1.3% YTD 2014). A segment-wise comparison shows that the government institutions’ segment (representing about 55% of public sector deposits) improved by 0.2% M-o-M (+2.2% YTD 2014). On the other hand, the semi-government institutions segment posted a decline of 6.5% M-o-M (down 23.7% YTD 2014), according to the QNBFS report.

Moreover, the government segment decreased by 8.7% M-o-M (+13.2% YTD). Private sector deposits declined 1.8% M-o-M (+9% YTD 2014). On the private sector front, the companies and institutions segment fell 2.1% M-o-M (+8.3% YTD 2014), while the consumer segment receded by 1.5% M-o-M (+9.7% YTD 2014).