The non-performing loans (NPLs) are “not a cause of concern” and Qatar’s banking sector expects credit risks to decline in 2012, according to the General Secretariat for Development Planning (GSDP).
The indicators published by the Qatar Central Bank (QCB) show that NPLs (as a share of total loans) were 1.7% in 2011 (the latest year for which data are available), down from 2% in 2010, while capital in risk-weighted assets was almost 21%, the GSDP said in its update on Qatar’s economic outlook.
The QCB also reported that banking profits grew by around 22% in 2011, with interest income being the major contributor.
Stressing that the first-half results for 2012 confirm continued strong performance in the domestic banking sector, the GSDP said that in a QCB survey conducted in the first half, commercial banks reported that they expected credit risks to decline over 2012.
Additionally, the QCB “stability indicators” and “stress tests” reported in the Financial Stability Review of August 2012 indicated that banking balance sheets should be resilient to a range of adverse shocks, the GSDP said.
The shocks include those emanating from the eurozone, since Qatar’s banks have minimal direct exposure to the bloc’s sovereign debt and their indirect exposure — through inter-bank assets — is also limited, it added.