Local banks are expected to see lending growth of around 20% until 2014 as their contribution to the rapidly expanding national economy grows, QNB has said in a report.
Qatar's real GDP is expected to grow by 6.5% this year and 6.8% in 2014, QNB said.
According to QNB, robust asset growth (18.4% in June 2013) has made Qatar's banking sector the third largest in the GCC.
Growth has mainly been driven by credit facilities and investment. Conventional banks account for the largest share of banking assets (72%) and were largely responsible for the strong growth with their balance sheets.
The contribution of the banking sector to the economy continues to expand, with the ratio of total banking assets to GDP increasing from 97% in 2008 to 127% in June 2013.
Asset quality is strong with non-performing loans (NPLs) expected to remain at about 1.7% of gross loans during 2013.
Deposits declined by 4.8% month-on-month (+11.1% year-to-date) while loans ticked up by 2.3% m-o-m (+9.1% ytd) in July. Hence, the banking sector's loan-to-deposit ratio (LDR) rose to 109% in July 2013 compared with 102% in June.
Furthermore, the domiciled LDR for the sector followed suit and stood at 101% versus 93% in June. Liquidity remains healthy when compared to Q2, 2012 (current LDR of 109% versus the 2012 high of 124% in April 2012).
"We forecast loan growth of about 15% for 2013. NIMs were under some pressure throughout H1, 2013. However, we expect NIMs to stabilize during H2, 2013," QNB said.
The overall loan book ticked up by 2.3% m-o-m (+9.1% ytd). Total domestic public sector loans improved by 2.2% m-o-m (+5.8% ytd). The improvement was on the back of government and semi-government institution segments.
The government segment increased by 7.9% m-o-m (+5.4% ytd), QNB said.
On the other hand, the government institutions segment (represents about 65% of public sector loans) was flattish m-o-m (-0.3% m-o-m but +8.1% ytd).
"We continue to expect growth in public sector loans to pick up in the coming months and then grow thereafter as project mobilizations pick up. It should be noted that public sector loans expanded by 26% QoQ in Q2,2012.
"Private sector loans increased by 2.9% m-o-m (+8.2% ytd). Consumption and others category (that contributes about 30.6% to private sector loans) loans grew by 5.5% m-o-m.
"On the other hand, real estate segment inched up by 2.2 m-o-m (-5.7% ytd) and general trade posted a 1% m-o-m (+1.7% ytd) growth in loan book," QNB said.