Moody’s Credit Rating Agency has commended Qatari banks for their resilience and strong financial performance, highlighting robust growth, asset quality, and their ability to navigate various economic challenges. In its recent report, Moody’s underscored the banks’ impressive liquidity coverage ratios and their success in attracting significant financial inflows through diverse deposits.
The report notes that Qatari banks are primarily funded by customer deposits, which accounted for approximately 52% of total assets as of June 2024. A significant portion of these deposits, around 36%, came from government and government-owned entities. Moody’s praised Qatari banks for expanding their deposit base from the domestic private sector while also attracting foreign and international deposits.
The agency highlighted the continued expansion of the credit sector, which aligns with Qatar’s broader economic growth. Notably, credit extended to the private sector is expected to see strong growth, driven by large-scale projects within the country. Moody’s projects private-sector credit growth to be in the range of 3% to 4% for 2024, reflecting sustained momentum in Qatar’s development initiatives.
Moody’s also pointed out the reduced credit risks faced by Qatari banks, citing their effective management of loan portfolios and credit exposures. A significant portion of credit is directed towards the public sector, which helps lower the risk of defaults. This focus on public-sector lending has enabled Qatari banks to mitigate the impact of potential economic shocks.
In addition to credit growth, the report praised the prudential regulations introduced by the Qatar Central Bank (QCB), which have helped curb Qatari banks’ reliance on foreign funding. These regulations have enhanced financial stability, with foreign liabilities decreasing to 33% of total liabilities by the end of June 2024, down from a peak of 39% at the end of 2021. Moreover, Qatari banks have successfully diversified their foreign liabilities across various maturities and regions.
Moody’s expects Qatari banks to shift toward a longer-term funding structure as interest rates stabilize, further supporting their financial health. As of March 2024, Qatari banks held liquid assets amounting to around 24.7% of total assets, providing a strong buffer against potential market fluctuations and supporting their continued growth.
Overall, Moody’s report highlights the resilience and stability of Qatari banks, crediting their strong financial foundations and strategic adaptability as key factors in maintaining growth and weathering economic uncertainties.