In 2008, vibrancy in almost every sector in Qatar’s economy drove the banking sector to flourish. Luckily, the strength of the Qatari banking sector has prevailed amid the unceasing global financial crisis and the country continues to bask in the fruits of its economic boom. Volatility in the Doha Securities Market caused major declines but, fortunately, thanks to its continued economic diversification strategy, real economic growth is expected to rise. This growth should go from an approximate 11.8% in 2008 to 13.4% in 2009, “as new liquefied natural gas and petrochemicals projects come on stream, easing to a still strong 8.8% in 2010,” according to Zawya. The IMF projected that as gas exports begin to surge, real GDP growth will soar from the 16.8% in 2008 to 21.4% in 2009. Even though inflation continues to be the one of the country’s biggest obstacles, “the domestic growth story is one that the nascent Qatar Financial Centre hopes will be enough to keep a steady stream of bankers turning to Doha as an economic refuge in troubled times,” said Simeon Kerr of the Financial Times. Abdulla bin Saud Al Thani, governor of the Qatari central bank, boasted that Qatar possesses “very sold banks, highly capitalized, highly liquid and nothing needs to be done by the central bank. Unlike their GCC counterparts — namely the UAE, Kuwait, and Saudi Arabia — there has been no need for the government to inject liquidity into the domestic banks.”
Banks across the country posted robust growth after the third quarter of 2008, showing the stability of Qatari banks in light of the international debacle. According to a recent report by Global Investment House (GIH), the combined profits of the listed Qatari banks increased by 34.3% during the first nine months from QR6.0 billion ($1.7 billion) to QR8.1 billion ($2.2 billion). The sector’s major market capitalization heavyweights, Qatar National Bank and Qatar Islamic Bank, achieved substantial growth of 62% and 45.7%, respectively, in their net profit by the end of the third quarter. As the largest bank in the country, Qatar National Bank (QNB) posted the highest year-on-year profit growth of 62% for the first nine months of 2008. The Commercial Bank of Qatar also witnessed strong year-on-year growth, reporting 54.8% by the end of the third quarter. Overall, most banks reported healthy growth levels.
Forecasts
Seeing as the banking sector is viewed as a financial safe haven in the Gulf, Qatar hopes bankers and investors will continue to flock to the country to help it achieve financial supremacy against oil-poor Bahrain and the emirate of Dubai. Even better are the forthcoming multi- billion dollar projects from various sectors, which would undoubtedly be good for the banking sector. GIH firmly believes that, “the banking sector would be one of the major beneficiaries of these projects and regional diversification programs.” In recent years, the small country has widely focused on ameliorating its quality of assets, which according to GIH, “resulted in substantial improvement in the quality of their loan portfolio.” GIH considered that “going forward, quality of the loan book is likely to remain sound, however, steep growth in loan books needs to be watched with caution.” With the central bank’s focus on confidence building, investors’ confidence in both the banking sector and the stock market is likely to be restored. What’s more is the brawny performance of Qatari banks in the third quarter of 2008 — during the global financial mayhem — which supports most positive outlooks and predictions for the growth of the country’s booming economy and banking sector.
