Higher margins, continued cost control, and a clear focus on risk have enabled Qatar’s listed banks to report, on average, a 5.5% profit increase year-on-year in 2019, a KPMG analysis has shown.
During the year, Qatar’s listed banks saw a 9.3% growth in assets as well, it said.
On the findings, Qatar-based partner and head (Financial Services for KPMG in the Middle East and South Asia) Omar Mahmood said, “The stable increase in profits of banks in Qatar is a testament to their efforts to grow their balance sheets, with a clear focus on high quality assets, and lower risk yet profitable business”.
Margins improved as interest/profit income was up by 6.5% compared to an increase of cost of funds of 5.9%, as the Qatar Central Bank reduced the headline deposit rates during the year by 50 basis points (0.5%).
Furthermore, the cost to income ratio of all banks also continued to decline as they saw a “collective decrease” in their staff and other administrative expenses.
“Qatar’s banking, therefore, continues to maintain one of the lowest cost-to-income ratios in the region,” KPMG noted.
The total assets of the listed banks also continued to show grow steady growth.
On this, Mahmood said, “Despite the liquidity pressures, we have seen banks in Qatar grow their asset base by 9.3%. The growth was driven by lending to customers and financial institutions in addition to the purchase of investment securities. The growth in assets also resulted in the slightly reduced return on assets for all but three listed banks”. The overall provisioning levels of the listed Banks for FY 2019 remained largely in line with FY 2018.
“The banks absorbed the impact of IFRS 9 in 2018, hence the overall provisions on lending to customers only increased by QR244mn. The increase was mainly seen in expected credit losses for stage 2, or watchlist customers, with a reduction in non-performing loan provisions.”
“Market sentiment has also reflected fundamentals with the share prices of all listed banks, except one, showing an upward trend which was a further positive signal from the market on the resilience and strength of the banking sector in Qatar,” Mahmood said.
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