Qatar public credit growth outpaces private sector

15 November 2011

Public sector credit growth up 22 per cent in September

Credit growth to the private sector in Qatar has been outpaced by credit growth to the public sector, according to the latest figures from the Qatar Central Bank (QCB).

Public sector credit growth was up 22 per cent year-on-year in September, compared to 17 per cent credit growth to the private sector. The figures show that overall credit growth rose by 18 per cent.

Credit to the real-estate sector rose by 91 per cent in September, while credit to contractors fell by nearly 20 per cent. Real-estate lending has been rising rapidly in Qatar, in May it was up 53 per cent. As part of a comprehensive government bailout package, the state purchased all the real-estate holdings of the Qatari banks in 2009.

Even that growth paled in comparison to lending to semi-government institutions, which was up by 122 per cent in September. “With robust economic activity, commercial banks’ total lending has maintained elevated growth since the start of the year, adding QR50bn ($13bn) to the December 2010 lending stock,” said the UK’s Barclays Capital in a research note.

Deposits are rising much more rapidly than credit growth although, up 24 per cent in September, bringing the loan-to-deposit ratio down to 101 per cent, from 105 per cent in August. Barclays Capital said that the increase in long-term deposits “puts banks in a comfortable position to expand credit”.

An increase in the loan-to-deposit rate to 105 per cent in August, from 92 per cent the previous month means banks may start to become more cautious in booking new deals. Between July and August, deposits fell by 8 per cent, while credit rose by 5.5 per cent.

Banks in Qatar continue to be fairly liquid, although predominately in the local currency rather than in dollars. The foreign assets of the Qatari banks contracted in September, while the total value of assets in the banks increased by 24 per cent to QR644bn. The rise in bank assets in August and September follows a contraction in July.

Money supply in September rose by 22 per cent.

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