Continued growth in lending activity during the fourth quarter of 2022 by GCC countries resulted in a rise in loan books at the end of the quarter.
Qatari banks were ranked first in the Gulf by number of loans granted during the last quarter of 2022, growing at the highest growth rate in the region by 3.5%, according to data from Kamco Invest.
The total value of credit facilities in Qatar reached 1.3 trillion Qatari riyals by the end of the last quarter of 2022, with the main support coming from the growth of credit provided to the real estate sector by 9%, followed by service sector and public sector credit growth of 5.5% and 5.4%, respectively.
Qatari banks listed on the stock exchange were ranked first in the Gulf region for risk prevention, having allocated the highest amount of precautionary provisions, totalling $3.9 billion (14.19 billion Qatari riyals) in 2022. This reflects the ongoing conservative approach of Qatar’s local banking sector, supervised by the Qatar Central Bank, which aims to maintain high levels of asset quality and stability.
Qatar National Bank (QNB) and Commercial Bank have also established provisions to hedge against the risks associated with high inflation in Turkey. Both Qatari banks own QNB Finance Bank and Alternatif Bank, respectively, which operate in the Turkish market and are exposed to risks related to hyperinflation and currency fluctuations.
Historically, Qatari banks experienced a rapid increase in provisions.
In 2018 and 2019, provisions reached $1.6 billion (5.82 billion Qatari riyals). Following the onset of the COVID-19 pandemic, they rose to $2.9 billion (10.55 billion Qatari riyals) in 2020 and continued to climb to $3.4 billion (12.37 billion Qatari riyals) in 2021.
Provisions are financial charges set aside during a specific period to account for potential declines in asset values due to possible risks or existing or probable liabilities.
These provisions are allocated to bad debts, doubtful debts, as well as mandatory and other supplementary provisions. When the reasons for their allocation cease to exist, these provisions can be adjusted and incorporated into profits.
Meanwhile, with $3.5 billion in provisions deducted during 2022, UAE banks came in second on the list of Gulf banks.
Saudi banks came in third with $2.6 billion in provisions, and Kuwaiti banks came in fourth with $800 million in provisions. Gulf banks’ total allocations for the year 2022 totalled $11.9 billion.
