Private sector deposits with local banks have grown 15.9% year-on-year in May, which is a clear reflection of improving liquidity in the Qatari market, a new report has shown.
The country’s private sector outpaced the public sector, whose deposits with the local bank grew only 7.7% year-on-year in May, QNB Financial Services said in a report.
On the other hand, loans disbursed by local banks grew 5.5% year-on-year in May, pointing to greater demand for credit in the country as a result of enhanced economic activities.
This, along with rising liquidity is likely to generate greater demand for credit in the country.
QNB Financial Services forecasts a growth in loan disbursement of up to 20% in 2013, a new study has shown.
Liquidity “remains healthy” with the current loan-to-deposit (LDR) ratio at 105% compared with a 2012 high of 124% recorded in April, it said in its latest report.
But it expects the net interest margin (NIM) to remain under “some pressure” throughout this year.
The banking sector has seen the overall loan book tick up by 5.5% (year-on-year) and 1.2% (m-o-m), again driven by the public sector.
“We continue to expect growth in public sector loans to pick up in the coming months and then grow thereafter as project mobilisation pick up,” QNBFS said.
Many believe the private sector would make real benefits once projects get kick-started, which is expected in third and fourth quarters of this year.
Recently, Public Works Authority (Ashghal) said it would invest QR100bn in infrastructure development projects in Qatar within the next five years.
“Many of the contracts are expected to be awarded after Eid al-Fitr”, the general manager of an engineering firm told Gulf Times yesterday.
In April it awarded contracts totalling QR1.2bn, covering seven major projects, including new health centres and additional operation theatres at Hamad General Hospital.
The projects are part of Ashghal’s ambitious QR14.2bn plans for 2013-14 to develop some 124 building projects across the country.
Recent reports indicate Qatar plans to award some 30 major road building projects worth QR100bn to construction companies this year.
The transportation sector takes a lion’s share of leading projects in the country with the metro-rail, expressway and Doha Bay initiatives topping the list. In addition, many major projects are expected to be awarded in 2013.
In terms of loans, the domestic public sector loans grew 6.2% year-on-year in May. But year-on-year, the semi-government institutions dropped 9.8%.
Also, the government institutions’ segment, which represents 65% of public sector deposits, climbed 8.7% year-on-year.
Private sector loans have grown 3.2% year-on-year.
But analysts believe there will be greater credit off-take from the private sector in the months ahead in view of rapid economic development in Qatar.
Reported by: Caye Global News, Gulf Times
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