Driven by an expected uptick in project mobilisation in the coming months, public sector loan growth will be the primary driver of Qatar's overall loan book in 2014, a new report has shown.
"The overall loan book exhibited slight improvement in February," said QNB in latest Qatar's banking sector update.
Total domestic public sector loans with local banks picked up by 1.8% month-on-month (MoM) after a 1.7% MoM growth in January 2014.
The government segment's loan book grew by 8.2% MoM after a 4.2% MoM growth in January. However, government institutions' segment (represents 61% of public sector loans) declined by 1.6% MoM compared with a 1% MoM growth in January 2014.
Private sector loans ticked up by 0.5% MoM compared with a 2.6% MoM growth in January, QNB said. The 'contractor segment' posted the biggest growth, in percentage terms, up 6.6% MoM, while the general trade segment (contributes 13% to private sector loans) loan book grew by 3.1% MoM.
Real estate, which contributes 28% to private sector loans inched up by 0.6% MoM. Overall, loans are up 3.3% year-to-date (YTD) in 2014.
Specific loan-loss provisioning stood at 1.4% of average trailing 12-months' loans compared with 1.4% in January 2014.
According to QNB, deposit growth outpaced loan growth in February. Loans climbed by 1% month-on-month (MoM) in February. This is after a strong performance of 2.3% MoM in January.
However, deposits expanded by 3.9% MoM in February (+1% MoM in January 2014). Hence, the banking sector's loan-to-deposit ratio (LDR) decreased to 104% at the end of February compared with 107% in January.
"Going forward, we expect activity in the banking sector to pick up with the public sector leading the way," QNB said.
Public sector led the deposit growth along with strong participation from the private sector.
Public sector deposits grew by 4.7% MoM (down 2.3% MoM in January). Delving into segment details, the government institutions' segment (represents 55% of public sector deposits) improved significantly by 3.3% MoM compared with a flat performance in the previous month.
Further, the government segment increased by 10.5% MoM compared with a 7.4% MoM decrease in the previous month. However, the semi-government institutions' segment posted a 0.6% MoM decline continuing its trend as it declined by 1.3% MoM in January. Private sector deposits gained by another 4.1% MoM (+4.1% MoM in January).
On the private sector front, the companies and institutions' segment expanded by 4.7% MoM (+4.2% MoM in January) and the consumer segment expanded by 3.6% MoM (+4.0% MoM in January).
Overall, deposits with local banks are up 4.9% year-to-date (YTD) in 2014, QNB said.
© Gulf Times 2014
