Qatar’s banking sector saw provisioning grow faster year-on-year than the total credit this October, indicating the conservative approach of the industry amidst the Covid-19 pandemic.
The provisioning towards interest/income from suspense and that towards special loans/finance grew faster than that towards expected credit loss in the review period, said the figures release by the Qatar Central Bank. Total credit by the commercial banks witnessed a 12.02% year-on-year growth to QR1.12tn in October this year. Domestic credit was seen expanding 13.19% to QR1.05tn; while foreign credit was down 2.11% to QR0.8tn in the review period.
However, total provisioning grew faster at 18.5% year-on-year to QR31.97bn in October 2020. The provisioning towards domestic coverage expanded 10.84% to QR25.16bn and those toward foreign coverage by 59.11% to QR6.81bn in the review period.
A recent report from the global credit rating agency Moody’s expects that the Qatari banks to see a “manageable” increase in provisioning this year.
The loan-loss provisioning costs increased in the first half of 2020, consuming 26% of pre-provision income, driven by the coronavirus outbreak, the rating agency had said.
“We expect provisions to rise further, reflecting problem loan formation as weaker economic activity makes it harder for borrowers to meet their repayments, particularly in the real estate, construction and contracting sectors,” Nitish Bhojnagarwala, VP-Senior Credit Officer at Moody’s, had said.
The provisioning towards interest/income in suspense grew fastest among the subgroups at 21.13% year-on-year to QR4.07bn or 13% of the total provisioning in October 2020.
The provisioning towards domestic interest/income in suspense rose 18.86% to QR8.53bn and that towards overseas interest/income in suspense by 38.46% to QR0.54bn in the review period.
The provisioning towards special loans/finance soared 20.65% year-on-year to QR14.37bn or 45% of the total provisioning in October this year.
The provisioning towards domestic special loans/finance was down 0.77% year-on-year to QR10.3bn; while that towards overseas special loans/finance almost tripled to QR4.07bn in the review period.
The provisioning towards expected credit loss shot up 12.59% year-on-year to QR10.03bn or 38% of the total provisioning in October 2020.
The provisioning towards expected domestic credit loss swelled 18.14% to QR10.03bn; whereas that towards expected foreign credit loss shrank 7.79% to QR2.13bn.
The provisioning towards specific contingent liabilities plunged 56.06% year-on-year to QR0.6bn in October 2020.
The commercial banks reported as much as QR0.5bn provisioning towards collective impairment in October 2020 compared to no such p