Doha: PwC in Qatar yesterday launched its full-year 2020 Qatar Banking Sector Report, which highlights the resilience displayed by Qatari banks despite volatility caused by the pandemic and drop in oil prices in the region. The report explores how through a unified approach, Qatar’s eight publicly listed commercial banks have weathered macroeconomic headwinds and demonstrated resilience throughout 2020, with aggregated results being marked by growth of assets.
Through increased public and private sector collaboration, coupled with a drive to diversify revenue streams and attract new investors, Qatar institutions swiftly mitigated the risks of COVID-19 induced volatility. The role played by the Qatar Central Bank (QCB) was vital in maintaining a robust banking ecosystem. Measures introduced by QCB significantly moderated economic volatility and laid the groundwork for a post-pandemic recovery across the private sector.
While Qatar’s eight listed commercial banks (Ahlibank, Commercial Bank of Qatar, Doha Bank, Al Khaliji, Qatar Islamic Bank, Qatar International Islamic Bank, Qatar National Bank and Masraf Al Rayan), have responded to the measures introduced by QCB and revised their strategies in line with macroeconomic development they have reported a decrease in profitability levels. Noting that, 2020 was underscored by growth of assets and streamlined non-interest costs.
In 2020, the aggregated assets of the eight listed commercial banks regulated by QCB grew by 7.3 percent to reach QR1.74 trillion as compared to 2019, which is reflected in the 7 percent growth of total aggregated loan and advances, which reached QR1.20 trillion. Such increases show that the lending activity remains healthy, driven by diversified sources of funding. However, profitability was impacted by market volatility, with FY2020 aggregate profits of the eight commercial banks falling by 12.43 percent to QR21.59bn as compared to 2019. The reduction can be attributed to several factors, including reduced revenue, primarily driven by a reduction in interest income. Moreover, this decline in income is linked to the aggregated impairment allowance of the eight listed commercial banks, which increased by 17.3 percent year-on-year, showing the risk of credit loss has increased over the last financial year.
Burak Zatiturk, Financial Services Leaders, PwC Qatar, commented: “Measures introduced by QCB provided much needed liquidity amid times of increased volatility. During 2020, the expansionary lending activity of listed banks is testament to market confidence in the business environment and the Qatari economy.” Adding “With banks maintaining a consistent lending strategy despite a volatile market in 2020, we can see signs of mid-to-long-term optimism for Qatar’s resilience, the evolution of its robust financial industry and GDP growth. In the near-term, we will see banks continuing to focus efforts on transformation, through the adoption of digital technologies, such as RegTech in order to future-proof their operating models.”
Qatar’s financial industry has demonstrated its agility and resilience throughout 2020, supported by enabling regulations and central bank policies. The banking sector remains in a position of strength, ready to capitalise on new technologies and a diversified investor base, in order to continue to be a catalyst for economic development and growth.
