DOHA: Overall bank lending conditions in MENA improved for the second quarter in a row with the index reaching 52.7, the highest level since its inception in 2011Q4. The tightening in credit standards continued to moderate during the period.
Credit standards for commercial real estate were tightened at a slower pace and credit standards for consumer loans were loosened and those for residential loans continued to be eased in the region, Institute of International Finance (IFF) noted in its 2013 Q2 ”Emerging Markets Lending Conditions Survey”.
Loan demand in the region maintained its upward trend with the index reaching a series high, led by increases in business as well as commercial and residential real estate loan demand. Consumer loan demand continued to grow at a pace similar to 2013 Q1.
Moreover, overall funding conditions eased for the first time in the series with the index reaching 50. The tightening in international funding conditions moderated somewhat from 2013Q1. Domestic funding conditions continued to improve, though at a slower pace amidst mid currency volatility and spread increases. Another bright spot was that non-performing loans (NPL) declined at a quicker pace and banks expect NPLs to fall in 2013Q3 as well.
The composite index of the IIF’s Emerging Markets Bank Lending Conditions Survey declined for the first time since 2011 Q4 and now stands slightly below the 50 mark, showing that overall bank lending conditions tightened somewhat after improving in the past two quarters.
Overall funding conditions deteriorate most, with the index tumbling below 50 for the first time since 2012 Q2 though the deterioration was mild compared to 2011-12. International funding conditions tightened, led by Emerging Asia as discussions about a tapering of asset purchases by the Fed increased financial market volatility and dampened capital flows to emerging markets. Domestic funding conditions also deteriorated, mainly in LATAM and Emerging Asia, as asset markets sold off and liquidity conditions tightened.
Overall lending conditions in Africa and Middle East (AFME) continued to improve, reaching the highest level since 2011Q2. Loan demand accelerated further while NPLs continued to decline and the tightening of credit standards moderated. However, international funding conditions tightened further and domestic funding conditions improved at a slower pace.
The optimistic outlook emerged from the IFF survey was evident in the 1H2013 results of Qatari Banks. The loan portfolios of Qatar’s listed banks collectively increased by QR57.6bn, up 13 percent for the first half of 2013. The deposits have grown by 15 percent to QR72.3bn during the period, a KPMG analyst told The P
Reported by: The Peninsula, Gulf Times, Caye Global News, BBC News
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