Qatari banks up lending to support infrastructure

26 February 2014

Loan growth hits 23 per cent in 2013

Loan growth in Qatar rose by 23 per cent in 2013, as banks responded to demand for financing to support infrastructure projects.

Qatar is rapidly developing its infrastructure, such as ports, roads, rail and power and water plants, as it races to host the 2022 Fifa World Cup and meet the goals of its Vision 2030 plan.

Local banks are expected to further increase their lending activities throughout 2014, says a new report from Qatari bank QNB.

Bank deposits grew by 24 per cent in 2013, and higher lending combined with a low cost base and low provisioning requirements have boosted banks’ profitability with a return on equity of 16 per cent in 2013.

In February Qatari bank QInvest announced a 40 per cent increase in revenues last year as well as a $60m increase in net profit in 2013.

Although Commercial Bank of Qatar reported a slight drop in overall profits in 2013 compared to 2012, it did increase loans and advances to customers by 38 per cent to QR66.9bn ($18.3bn) compared to QR48.6bn at the end of 2012. It put the increase in lending down to credit growth in the real estate and services sectors.

Doha Bank also reported a rise in lending appetite in 2013, with loan volumes reaching QR41.1bn, marking 22 per cent increase on the previous year. The bank also recorded a slight increase of 0.6 per cent in net profit compared to its 2012 results.

Qatari banks are also taking larger shares in long-term project financing of Qatar’s large-scale infrastructure developments.

The $500mn Ras Abu Fontas A2 independent power and water project (IWPP), which reached financial close at the end of last year, was purely funded by Qatari banks. This marks a first for the Gulf country’s project finance market.

A conventional $180m debt financing was provided by QNB Group while a $270m Islamic loan facility provided by local banks Barwa Bank, Masraf al-Rayan and Qatar Islamic Bank.

Qatari banks will be eyeing further project finance opportunities such as Qatar Electricity and Water Company’s (QEWC) facility D IWPP and as well as its plans to build its reverse-osmosis water plant at Ras Laffan.

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