Qatari banks show resilience in 2015

09/02/2016 08:15 AST

Banks in Qatar have bucked the slowdown concerns by posting growth in their net profits. Six out of eight major banks in Qatar have registered growth in net profit while just two banks saw their net profit declining in 2015.

QIB (Qatar Islamic Bank) recorded highest growth in its net profit by registering around 22 percent annual growth as its net profit grew to QR2.03bn in 2015 from 1.67bn in previous year. Qatar National Bank (QNB) profit grew 7.6 percent to QR11.3bn in 2015 from 10.5bn in 2014. Al Khaliji Bank net profit grew from QR562.9m in 2014 to QR625.5m in 2015, showing a growth of around 11 percent. Ahli Bank net profit grew from around QR601m in 2014 to QR647.7m in 2015, reflecting a rise of 7.7 percent. Doha Bank’s net profit grew 1.5 percent to QR1.37bn in 2015 from QR1.35bn in 2014.

Masraf Al Rayan net profit increased from QR2bn in 2014 to QR2.07bn in 2015, showing a growth of 3.6 percent. It is likely to be a tight rope walk for banks in Qatar going forward. Analysts have forecast a tough year for banks in 2016 as gulf economies reel under the pressure of fall in oil prices.

Standard & Poor’s Ratings Services, in its latest reports on Qatari banks’, said that banks profitability might come under pressure in 2016.

“Although the drop in hydrocarbon prices and the Qatari government’s streamlining of its public investment programme are putting the brakes on economic growth, banks’ asset quality held generally steady while credit growth remained resilient on the back of strong private sector activity in 2015. Nevertheless, as liquidity in the banking sector tightens further with the rise of local and global interest rates, we expect credit growth will lose some steam,” said the report.

Standard & Poor’s Ratings Services anticipates that operating conditions for Qatari banks will toughen in 2016, denting their profitability. “In 2015, the Qatari public sector withdrew some of its deposits from the domestic banking system. We expect more of the same in 2016 and foresee a further squeeze on banks’ liquidity,” said the report. “Further trimming of government spending will likely reduce private-sector lending opportunities. At the same time, we think banks will manage their funding profiles more conservatively, which should translate into lower growth. We also expect credit losses will increase given the economic slowdown and the pressure we expect in some sectors, such as contracting,” added the report.

The Peninsula