Deposits in the Qatari banking system rose by 18.5 per cent during 2011 driven by a rise in public sector deposits, which was mirrored by the dominance of the state in loan growth.
In 2011, public sector deposits rose by 74.7 per cent, while private sector deposits were up by just 6.3 per cent. Lending to the public sector rose by 44.7 per cent in 2011, while private sector credit growth was up by 19.3 per cent. Between November and December, private sector credit fell by 0.1 per cent.
The inflow of government cash pushed the loan-to-deposit rate down to 111 per cent, from 114 per cent at the end of November 2011. That will be a relief to banks, which are expected to spend much of 2012 trying to bring in additional deposits to get the rate back down to the 90 per cent guidelines set by the Qatar Central Bank.
Private sector credit growth is expected to slow as a result, with the UAE’s Emirates NBD forecasting that it will fall to 13 per cent in 2012.
Although the loan-to-deposit ratio is high, bankers in Qatar say liquidity conditions are still good. “We still have liquidity and judging by the direction of pricing of loans, there is still ample liquidity around in riyals,” says one banker in Doha.
In December, state-owned Qatar Petroleum and the US’ ExxonMobil completed the financing for the $10.4bn Barzan gas project, which included large contributions from several Qatari banks. The development required as part of the country’s infrastructure investment in preparation for hosting the 2022 Football World Cup is expected to support further expansion in public sector credit growth over the next few years.
In the private sector, credit growth was predominately to the real-estate sector, which has been recovering from a slow period after the financial crisis of 2008 and its impact on regional property prices and private sector investment.
Overall loan growth was up 28 per cent in 2011 and bank assets were up 22.1 per cent.