Qatar banks record overall growth in 2023; to see advent of new products to lift priority sectors

Qatari banking sector has had an impressive 2023 with local lenders recording a growth in their assets, overall loan book and deposits in the most part of the year.
Qatari banking sector recorded a growth in its overall loan book and deposits in October, QNB Financial Services (QNBFS) said in a recent report.
The sector’s total assets increased 1% MoM (up 1.8% in 2023) in October to reach QR1.93tn, QNBFS said.
Total assets increase in October was mainly due to a gain by 1.2% in domestic assets and 2.5% in foreign assets.
Assets grew by an average 6.9% over the past five years (2018-2022), QNBFS said and noted liquid assets to total assets was at 31.1% in October, compared to 31.5% in September this year.
October recorded an increase in both the credit facilities offered and deposits held by the local banks.
The overall loan book gained in October. Loans went up 1.5% during that month to reach QR1,275.6bn.
Loans gain in October was mainly due to a rise by 3.1% in the public sector and 0.8% in the private sector.
Loans moved up by 1.6% in 2023, compared to a growth of 3.3% in 2022. Loans grew by an average 6.7% over the past five years (2018-2022).
Qatar’s banks registered the biggest quarter-on-quarter increase in net interest income (NII) and topline growth and the lowest operating cost within the Gulf banking industry during the third quarter (Q3) of 2023, according to Kamco Invest, a regional economic think-tank.
"Qatari banks recorded the biggest quarter-on-quarter increase in net interest income during Q3-2023 at 10.8%, followed by Kuwaiti- and the UAE-listed banks with growth of 6.9% and 5.5%, respectively. Saudi banks were next with a growth of 3.8%," Kamco said.
Recently, the Qatar Central Bank (QCB) expressed its keenness to provide effective and valuable initiatives that help create an environment conducive to the growth of the financial technology sector in the country, as these platforms support the development of the financial sector and enhance the transparency, efficiency and ease of the borrowing process.
Under this, the QCB issued instructions for the loan-based crowdfunding regulation in the country.
This, the QCB said, is for the purpose of licensing and regulating loan-based crowdfunding activities and services in Qatar.
All companies wishing to work in this field must apply to obtain the necessary licence from the QCB.
Loan-based crowdfunding platforms are considered innovative financial platforms that enable borrowers in need of financing to communicate with various investors and obtain short-term financing.
Borrowers, such as SMEs, who find it difficult to access traditional bank loans, can obtain the financing necessary for growth of their business and overcome the challenges that they may face with the expansion of their projects.
Loan-based crowdfunding platforms represent an important opportunity for investors to diversify their investments and participate in supporting SMEs.
Qatar’s banking sector will see the advent of new products to support growth in priority sectors, expansion of trade and export finance for corporates, special finance for small and medium enterprises (SMEs), and savings and investment products for expatriates.
Moreover, Islamic finance and ESG (environment, social and governance) products are also on the pipeline, according to the QCB.
These figured among the important suggestions made by the QCB in the recently released third financial sector strategy as part of efforts to unlock the full economic potential of the country.
The strategy, through which the central bank aims to enhance the financial sector's contribution to QR84bn in gross domestic product, highlighted the select growth areas within the banking pillar such as tailored financing, specialised advisory services and digital banking and payment solutions.
The banking pillar suggested launching of new products to support growth ambitions in priority sectors, expansion of trade and export finance for wholesale and corporate segments, developing special financing programmes to support SME growth, offering savings and investment products for the expats to encourage them to invest in Qatar (mortgages and investment products) and providing a range of Islamic and ESG product offerings.
The initiative should be to increase financial service solutions to fill gaps and broaden market offerings, including digital and virtual asset service solutions, and net zero transaction offerings, the strategy said.
It suggested initiatives to implement targeted market infrastructure guidelines to foster the growth of the fintech industry and facilitate the digital transformation of the banking sector.
For improving the financial stability and operational effectiveness, the QCB suggested initiatives to develop measures to enhance the banking system's resilience and establish cybersecurity and business continuity frameworks that adapt to changes in banks' business models, market trends and external risks.
Majority of Qatari banks consider 'risks from cyber world' has 'high to very high risk', the QCB said in its Financial Stability Report.
Vulnerabilities on account of ‘risk from fraud’ is also considered to be reckoned among high risk factors as opined by banks, the QCB said in its latest ‘Risk Perception Survey’ (RPS).
The RPS was conducted among 16 banks including the Qatar Development Bank.
The survey collected bank’s opinion on the level of risk on various risk factors. Seven risk factors are provided under ‘global risks’ while six factors are provided under domestic macroeconomic risks.
The survey also sought bank’s opinion on various risk elements on ‘credit risk’, ‘liquidity risk’, ‘market risk’ and ‘operational risk’. The risk levels are captured through a five-point ‘Likert scale’ ranging from ‘very low’ to very high’.
The responses received on each risk variables are converted into an index ranging from 0-100, where zero represents no risk and 100 represents very high risk as per the opinion of the surveyed banks.
Meanwhile, Qatari banks actively participated in the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund held in Marrakesh, Morocco in October, 2023.
HE the Minister of Finance Ali bin Ahmed al-Kuwari participated in the reception of Qatari banks, which was held under the auspices of the QCB and in the presence of HE the Governor Sheikh Bandar bin Mohamed al-Thani on the sidelines of the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.