Qatar's loan book expands 1.9% in Jan amidst public sector growth, says QNBFS

06/03/2025 05:54 AST

Qatar's banking sector saw an increase in its loan book by 1.9 percent month-on-month (MoM) in January 2025, QNB Financial Services (QNBFS) has said in a report on Wednesday.

Meanwhile, total deposits increased by 1.3 percent MoM and 4.1 percent on an annual basis. This simultaneous rise in loans and deposits pushed the loan-to-deposit ratio (LDR) to 132 percent in January 2025, compared to 131.2 percent in December 2024.

However, total assets edged lower by 0.3 percent MoM to QR2.040 trillion in January 2025, though they recorded an overall increase of 3.9 percent in 2024.

The overall loan book expansion was primarily driven by the public sector, which grew by 5.3 percent MoM and 5 percent in 2024. Within the public sector, government loans, which constitute approximately 31 percent of public sector loans, surged by 13.3 percent MoM and 3.6 percent annually. Government institutions' loans, which make up around 65 percent of public sector loans, rose by 2.2 percent MoM and 7.7 percent in 2024. However, the semi-government institutions segment saw a marginal decline of 0.2 percent MoM and 18 percent over the year.

Private sector loans experienced a modest rise of 0.6 percent MoM and 3.8 percent in 2024. The main contributors to this growth were general trade loans, which increased by 1.5 percent MoM and 6 percent over the year, real estate loans, which moved up by 1 percent MoM and 9 percent in 2024, and services loans, which were higher by 0.4 percent MoM and 5.6 percent in 2024. However, loans under the consumption and others category declined by 0.8 percent MoM and 0.8 percent in 2024.

On the deposit front, private sector deposits grew by 1.5 percent MoM and 1.2 percent in 2024. Consumer deposits increased by 1.3 percent MoM and 7.2 percent over the year, while companies and institutions' deposits moved up by 1.7 percent MoM but recorded a decline of 5.7 percent in 2024.

Public sector deposits also gained 1 percent MoM and 4.2 percent in 2024. Within this segment, semi-government institutions' deposits saw a sharp increase of 15.3 percent MoM, though they declined by 14.4 percent in 2024. Government institutions' deposits, which represent around 52 percent of public sector deposits, decreased by 1.3 percent MoM and 1.5 percent annually, while government deposits, which constitute approximately 34 percent of public sector deposits, dropped by 0.6 percent MoM but registered a significant 25.5 percent increase over the year.

Non-resident deposits continued their upward trajectory in 2025, rising by 1.3 percent MoM and 11.7 percent in 2024. The share of non-resident deposits as a percentage of total deposits increased to 19.5 percent in January 2025 from 18.2 percent at the end of 2023, indicating that banks are still relying on external funding. Meanwhile, loans outside Qatar saw a slight decline of 0.2 percent MoM but recorded a strong growth of 13.5 percent in 2024.

Loan provisions as a percentage of gross loans edged lower to 3.8 percent in January 2025, compared to 3.9 percent in December 2024. Provisions have increased from 2.3 percent in 2019 to 3.9 percent in 2024, mainly due to Stage 2 and Stage 3 loans originating from the contracting and real estate sectors. Liquidity in the banking sector remained stable, with liquid assets to total assets decreasing slightly to 30.2 percent in January 2025, down from 31.3 percent in December 2024. Despite this decline, liquidity remains in a healthy position, ensuring overall financial stability.

The Qatar banking sector demonstrated resilience in January 2025, with growth in loans and deposits despite a minor dip in total assets. Public sector lending remained the key driver of loan book expansion, while non-resident deposits continued to play an important role in external funding. Although liquidity levels saw a slight decline, they remained robust, reinforcing the sector's overall financial strength.

Qatar Tribune