Driven by project financing and the expanding population, bank lending is set to grow continually in Qatar, a new report has shown.
Bank loan growth rose to 19.4% year-on-year in November 2015 from 16.5% in October, QNB said in its latest ‘Qatar monthly monitor’.
Loans to the public sector grew by 6.8% y-o-y, lending to the private and foreign sectors also grew by 23.6% and 41.9% respectively, it said.
Banking asset growth rose to 12.3% in November 2015 from 10.7% in October, QNB said.
Local banks’ foreign assets grew by 1.9% year-on-year, driven by expansion in credit (41.9%); while domestic assets grew by 16.6%, also driven by the growth in domestic credit (17%).
“We expect growth in bank assets to reach 10.5% in 2015, increasingly driven by project lending and population growth,” QNB said.
However, local bank deposits fell in November on further contraction in public sector deposits, the report showed.
Bank deposits’ year-on-year (y-o-y) growth fell to 5.8% in November 2015 from 6.4% in October. Public sector deposits contracted by 9.9%, private sector deposits and non-resident deposits grew by 11.9% and 50.9% respectively, QNB said.
“We expect deposits to continue growing on strong population growth,” QNB said.
Qatar's international reserves fell to $38.5bn in November 2015 compared with $39.1bn in October, the report said.
In months of prospective import cover, international reserves were broadly stable at 6.7 months of imports from 6.8 months in October.
"We expect international reserves to stabilise at around 7 months of import cover going forward as oil prices stabilise then recover in 2017," QNB said.
The overall balance of payments recorded a small deficit of $1.7bn in Q3, 2015, leading to a decrease in international reserves.
The current account surplus narrowed to $2.8bn in Q3, 2015 on lower hydrocarbon exports even as the capital and financial account recorded a deficit of $3.9bn over the same period.
QNB expects the current account surplus to narrow in 2015, before stabilising in 2016-17.
The foreign merchandise trade surplus fell to $3bn in November 2015 from $3.4bn in October, but it is down from $6.5bn a year earlier.
The y-o-y decline was mostly due to the fall in exports, which decreased by 36.7% y-o-y on lower oil prices while imports increased by 2.8% over the same period on rising domestic demand.
"We expect the merchandise trade surplus to stabilise in 2016 in line with oil prices," QNB said.
Broad money (M2) grew to 3.1% in November from 2.6% in October, backed by a growth in quasi money, QNB said.
The rise was mostly attributable to the pickup in growth of quasi money from 1.6% in October to 3.5% in November, while growth in M1 slowed to 1.9% in November from 5.7% in October.
“We expect M2 to continue growing as strong population growth is projected to drive the expansion in deposits,” QNB said.