Qatar’s banking sector activity is expected to pick up in the coming months although loans and deposits growth was flat in November, a new report has shown.
Local bank loans’ declined by 0.1% month-over-month (MoM) but are up 11.9% year-to-date (YTD), QNB Financial Services said in a report. Deposits also dipped by 0.2% MoM (+16.4% YTD) last month.
The banking sector’s loan-to-deposit ratio (LDR) remained at 107% at end-November compared with 107% in October this year.
“Going forward, some banks will be issuing Tier I bonds,” QNB Financial Services said.
Commercial Bank and Doha Bank announced they will be raising QR2bn each in Tier 1 bonds to improve their capital adequacy ratios (CARs) as well as provide additional funds aiding loan book growth, it said.
Public sector deposits retreated by 5% MoM (+28.1% YTD), while private sector deposits gained by 3.7% MoM (+15.1% YTD). The government institutions segment (that represents 58% of public sector deposits) ticked up by 1.4% (+27.6% YTD) compared with a 4.9% decline in the previous month.
However, the government segment retracted its positive momentum, contracting by 16.4% MoM, but it is still up 44.1% YTD. The semi-government institutions segment followed in the footsteps of the government segment slipping by 4.2% MoM (+7.4% YTD). On the private sector front, the consumer segment expanded by 6.1% MoM (+23.0% YTD) and the companies and institutions segment ticked up by 1.2% MoM (+7.5% YTD).
“The overall loan book exhibited flattish performance in November,” QNBFS said.
Total domestic public sector loans declined by 1.1% MoM after a robust performance in October. On a YTD basis, public sector loans are up 8.8%. The government segment loan book contracted by 7.6% MoM (+6.3% YTD).
On the other hand, the government institutions’ segment (that represents 66% of public sector loans) inched up by only 0.8% MoM (+12.1% YTD).
“We believe public sector loan growth will be the primary driver of the overall loan book in 2014. Our assumption is based on the expected uptick in project mobilisations in the coming months,” QNBFS said.
Private sector loans inched up by 0.9% MoM (+12.2% YTD). The services segment posted the biggest growth, up 9.9% MoM (+43.6% YTD), while the real estate (that contributes 28% to private sector loans) loan book retreated by 1.2% MoM (down 3.1% YTD).
Consumption and others (contributing 31% to private sector loans) declined 1.5% MoM (+13.5% YTD).
Specific loan-loss provisioning stood at 1.4% of average trailing 12-months loans compared with 1.4% in October 2013, the report said.
Commercial Bank, CBD said to raise $500mn each from syndicated loans
Commercial Bank of Dubai, a lender 20% owned by the Dubai government, and Qatar’s Commercial Bank, are raising about $500mn each from syndicated loans, two bankers familiar with the plan said.
The facilities have tenors of three years and will help pay debt maturing next year, according to the bankers, who asked not to be identified because the information is private.
Commercial Bank of Dubai has a $450mn, three-year syndicated loan maturing in August that pays interest of 1.75 percentage points, or 175 basis points, above the London interbank offered rate, according to data compiled by Bloomberg. Qatar’s Commercial Bank, the Gulf country’s second-biggest bank by assets, has a $455mn loan due in February.
An official at Commercial Bank of Dubai and a spokesman at Doha-based Commercial Bank, who both asked not to be identified because of company policy, declined to comment.
Banks in the UAE, the second-biggest Arab economy, are recovering from the credit crisis which slowed lending, hurt investment banking and led to a surge in loan defaults. Commercial Bank of Dubai reported a 1.1% increase in nine-month profit to 751.5mn dirhams ($205mn).
Banks in Qatar, the world’s biggest producer of liquefied natural gas, are being buoyed by government spending as the country prepares to host the 2022 soccer World Cup.
Syndicated loans in the Middle East and North Africa have risen 14% this year from the year-earlier period to $42.3bn, according to data compiled by Bloomberg.
HSBC Holdings and Standard Chartered have been the biggest arrangers of loans this year. Gulf Times