Qatar banks record strongest lending growth among Gulf peers in Q4-2022: Kamco Invest

Qatar banks saw the strongest lending growth among the Gulf lenders during the fourth quarter (Q4) of 2022 despite hard interest rate regime, according to Kamco Invest, a regional economic think-tank.
The GCC (Gulf Co-operation Council) central banks data showed that after months of marginal activity, Qatari banks reported the biggest lending growth at 3.5% during Q4-2022 compared to a decline in lending during the previous quarter.
Aggregate credit facilities in Qatar reached QR1.3tn at the end of Q4-2022 mainly backed by 9% growth in lending to the real estate, followed by 5.5% and 5.4% growth in lending to services and public sector. A decline in lending to industry (-4.4%) and consumption (-2.5%) partially offset the overall growth in domestic lending.
Saudi Arabia continued to report strong growth at 1.4%, but the pace declined considerably and was the smallest since June-2019.
The growth in the case of Kuwaiti banks was also modest at 0.9% quarter-on-quarter and was the smallest growth since Q4-2020, while credit growth reported by Oman central bank came in at 1.2% during Q4-2022.
Banks in Saudi Arabia showed growth in lending to utilities and health services, transportation and communication, finance and real estate that was offset by a decline in lending to manufacturing and processing and agriculture and fishing industries.
The trend in Oman was largely positive but a steep decline of 4.5% in lending to mining and quarrying partially offset the overall growth in lending.
The report said Qatari-listed banks showed a strong deposit growth of 3.1% to $405bn. Saudi Arabia, meanwhile, continued to boast the biggest share of GCC customer deposits at $691bn after recording a q-o-q growth of 0.2% during Q4-2022.
The net impact of a stronger lending growth and a slightly smaller customer deposit growth was a marginal growth of 30 bps in the aggregate GCC loan-to-deposit ratio at the end of Q4-2022. Moreover, despite the growth, the ratio remained below the 80% level and at one of the lowest quarterly levels at 79.3%, led by a fall in the ratio in Kuwait and Qatar that was more than offset by growth in the rest of the markets.
The report said aggregate return on equity (RoE) for the GCC banking sector continued to show improvement during Q4-2022 reaching one of the highest levels over the last few years at 12.3% compared to 11.8% at the end of Q3-2022.
At the country level, UAE-listed banks once again topped in the region with the highest RoE at the end of Q4-2022 at 13.9% closely followed by Saudi and Qatari banks with RoE of 12.5% and 12.4%, respectively.
On loan loss provisions (LLP), Kamco said Qatari banks reported the biggest provisions during 2022 at $3.9bn followed by the UAE and Saudi-listed banks with provisions of $3.5bn and $2.6bn respectively.