Banks across Qatar have shown substantial resilience this year, witnessing robust growth, asset quality, and substantial capacity to navigate various challenges. In its latest release, Moody’s highlighted the ongoing expansion in Qatar’s credit sector, in line with its economic growth trajectory.
The agency expects credit to the private sector to see notable growth this year due to momentum in implementing large-scale projects within the country. Moody’s forecasts that private sector credit growth will be around 3-4 percent.
Qatari banks attract significant financial inflows
Banks in Qatar have demonstrated impressive liquidity coverage ratios and successfully attracted significant financial inflows through diverse deposits. Qatari banks have recently been primarily funded by customer deposits, which accounted for approximately 52 percent of total assets as of June 2024. Meanwhile, government and government-owned entities represent around 36 percent of total deposits.
Moody’s noted the success of Qatari banks in expanding and attracting deposits from the domestic private sector while also drawing in foreign and international deposits.
Minimal credit risk
The report also noted the minimal credit risk that banks across Qatar face since a significant portion of the credit goes to the public sector, which significantly reduces the risk of credit defaults. The agency noted that Qatari banks have effectively mitigated the risks associated with unexpected economic shocks due to their loan portfolios, credit exposures, and ability to manage associated challenges.
Qatar’s banking sector remains stable with recent regulations from the Qatar Central Bank (QCB) that seek to curb overreliance on foreign funding. These regulatory frameworks have reinforced financial stability and helped decrease foreign liabilities to 33 percent of total liabilities by June 2024, down from a peak of approximately 39 percent in 2021.
Read: Islamic banks to outpace conventional banking in GCC, says Moody’s
Banks to shift toward longer-term funding
Additionally, banks have successfully diversified their foreign liabilities across various maturities and geographies. Moody’s anticipates that banks in Qatar will shift toward a longer-term funding structure in a lower interest rate environment. In March 2024, Qatari banks’ stocks of liquid assets stood at around 24.7 percent of total assets, providing a sound buffer against potential market fluctuations and risks and supporting their growth trajectory.
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