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21 July 2016
DUBAI: Moody's Investors Service's outlook for Qatar's banking system remains stable, unchanged since 2010.
The outlook reflects the rating agency's expectation that operating conditions will remain favorable for Qatari banks as a result of high government spending amid low oil prices.
The outlook expresses Moody's expectation of how bank creditworthiness will evolve in Qatar over the next 12-18 months.
Moody's report, entitled 'Banking System Outlook Qatar: Resilient Operating Environment Despite Funding Pressures Drive Stable Outlook' is available online.
Moody's subscribers can access this report via the dedicated link.
"We expect continued spending by the Qatari government to support credit growth, thereby providing a relatively robust lending environment for the country's banks," says Moody's Assistant Vice President Nitish Bhojnagarwala, As noted in June, Moody's expects real GDP growth of 4.1 percent for 2016 despite continued low oil prices. This is due to strong government spending on infrastructure projects that will drive economic expansion and support the FIFA World Cup in 2022.
While GDP growth has slowed over the last few years from extremely high rates around 13.4 percent in 2006-2014 -- Qatar's economic growth remains the strongest in the Gulf Cooperation Council (GCC).
Loan quality, however, is expected to face modest pressure over the outlook horizon.
Moody's forecasts problem loans to increase to around 2 percent of total loans by December, compared to 1.5 percent the year before.
Nevertheless, the rating agency notes that the nonperforming loan ratio is likely to remain the lowest in the GCC heading into 2017.
Underlying capital buffers should also remain strong.
The rating agency expects tangible common equity (TCE) to remain around 16.5 percent of risk-weighted assets (December 2015: 16.6 percent) into 2017, driven by slower credit growth combined with higher profit retention.
"Even under our low probability stress scenario modeling a significant slowdown in economic activity, Qatari banks' capital ratios remain resilient," adds Bhojnagarwala.
DUBAI: Moody's Investors Service's outlook for Qatar's banking system remains stable, unchanged since 2010.
The outlook reflects the rating agency's expectation that operating conditions will remain favorable for Qatari banks as a result of high government spending amid low oil prices.
The outlook expresses Moody's expectation of how bank creditworthiness will evolve in Qatar over the next 12-18 months.
Moody's report, entitled 'Banking System Outlook Qatar: Resilient Operating Environment Despite Funding Pressures Drive Stable Outlook' is available online.
Moody's subscribers can access this report via the dedicated link.
"We expect continued spending by the Qatari government to support credit growth, thereby providing a relatively robust lending environment for the country's banks," says Moody's Assistant Vice President Nitish Bhojnagarwala, As noted in June, Moody's expects real GDP growth of 4.1 percent for 2016 despite continued low oil prices. This is due to strong government spending on infrastructure projects that will drive economic expansion and support the FIFA World Cup in 2022.
While GDP growth has slowed over the last few years from extremely high rates around 13.4 percent in 2006-2014 -- Qatar's economic growth remains the strongest in the Gulf Cooperation Council (GCC).
Loan quality, however, is expected to face modest pressure over the outlook horizon.
Moody's forecasts problem loans to increase to around 2 percent of total loans by December, compared to 1.5 percent the year before.
Nevertheless, the rating agency notes that the nonperforming loan ratio is likely to remain the lowest in the GCC heading into 2017.
Underlying capital buffers should also remain strong.
The rating agency expects tangible common equity (TCE) to remain around 16.5 percent of risk-weighted assets (December 2015: 16.6 percent) into 2017, driven by slower credit growth combined with higher profit retention.
"Even under our low probability stress scenario modeling a significant slowdown in economic activity, Qatari banks' capital ratios remain resilient," adds Bhojnagarwala.
© Arab News 2016
