By Santhosh V Perumal
DOHA: The loan quality of Qatari commercial banks is expected to remain sound but steep growth in credit off-take is an area of concern, according to Global Investment House.
“We believe that going forward, the quality of the loan book is likely to remain sound, however, steep growth in loan book need to be watched with caution,” GIH said in its report.
Highlighting that Qatar has launched an impressive domestic investment programme aimed at diversifying its economic base, it said the banking sector would be one of the major beneficiaries of these projects and regional diversification programmes.
Prime Minister and Foreign Minister HE Sheikh Hamad bin Jassim bin Jabor al-Thani recently indicated that government had no intention of halting infrastructure projects at home or reducing overseas investments.
The Qatar Investment Authority announced a $5.30bn package for picking up 10%-20% stake in local banks in order to boost the banks’ capacity to finance development projects.
The strong performance of Qatari banks in the third quarter of this year, despite the ongoing global financial crisis, supported the positive outlook for the banking industry for the medium term, GIH said.
Strong earnings growth posted by the listed banks in January-September showed that banks in Qatar remain stable amid the global financial imbroglio, the report said.
“Qatar banking sector, with its limited exposure to the global financial markets, was able to escape the severe implications of the global financial distress,” GIH said.
The combined profits of the listed Qatari banks rose 34.3% to QR8.1bn in the first nine months of this year and sector heavy-weights (in terms of market capitalisation) such as QNB and Qatar Islamic Bank have achieved a growth of 62% and 45.7% in their net profits.
The confidence building exercise by the Qatar Central Bank (QCB) should definitely restore investors’ confidence in the banking sector in particular and the stock market in general, it said.
QCB governor HE Sheikh Abdullah Mohamed al-Thani has said the country’s banks are very solid and the central bank has lots of instruments in the open market to be utilised, when needed.
The Doha Securities Market had lost about 28% in October and 22% year-to-date as measured by GIH’s DSM Index.
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