At QR1.46tn, the banking sector’s average asset during 2019 recorded a growth of 5.3% over the previous year, Qatar Central Bank has said in a report.
The asset growth was supported by growth in credit, which grew significantly over the last year. The growth in average credit for the year recorded 5.8%, higher by around 1 percentage point over last year, QCB said in its 11th Financial Stability Review issued on Sunday.
However, the deposits growth was not that adequate. Credit to the public sector as well as non-resident declined, though the pace of decline moderated during the year.
The deposits mobilisation, which experienced a negative growth in 2018, reversed its track and recorded a significant growth of 4.8% by end-December 2019.
The liquidity risk of the banking sector reduced during the year as the sector continued to maintain sufficient liquid assets. The ratio of (HQLA) to total assets improved in the first quarter of the year remained more or less stable till the fourth quarter and thereafter declined though marginally.
The banking sector reduced its cross-border exposure at end December 2019. All the components of assets including credit and investments declined but for assets with foreign financial institutions (FFI).
At the same time, cross-border liabilities recorded substantial growth. The highest growth was recorded by non-resident deposits, which grew by 23.2% in 2019.
The banking sector’s credit risk appears to have diminished. NPL (non-performing loans) ratio declined marginally reflecting improvements in timely and proper recognition of problem loans with the introduction of IFR-9 standards.
The decline in NPL ratio while increase in provisions, improved the coverage ratio.
The credit stress tests indicate, even though at individual bank level traces of risk can be identified.
Overall, the banking sector is at comfortable position owing to the availability of sufficient capital.
The non-banking financial sector in Qatar comprising of insurance firms, Qatar Development Bank (QDB), finance companies, investment companies, exchange houses and Qatar Financial Centre (QFC) institutions recorded positive asset growth while moderating overall risk.
The assets of QCB regulated NBFI sector recorded “healthy” growth of 6% during 2019.
All the segments of the NBFIs recorded positive growth during 2019 with very high growth, well above 20 percent, recorded by the finance companies and exchange houses.
The insurance business, continued to account for three-fourths of total assets of QCB regulated NBFIs, QCB noted.