The Qatari government’s policy to make the country a center for Islamic banking is succeeding, according to a report printed by Standard and Poor’s Ratings Services.
Such titled “Qatar’s Islamic Banks Are On A Fast Track To Growth,” the report focuses on that a billow in the require for local credit to finance government substructure and investment plans has made Qatar’s Islamic banking system the quickest-growing worldwide.
“The total balance sheet of Qatar’s Islamic banks was $54 billion (Dh198 billion) as in the end of 2012,” said Standard & Poor’s credit analyst Timucin Engin. “Presuming that the Islamic banks grow by an average of 15 % over the next five years which is outstandingly lower than the previous five-year average of 35 % . We could see their resource base going beyond $100 billion by 2017.
“This would make Qatar’s Islamic banking market the third largest in the Gulf area, after Saudi Arabia and the UAE,” added Engin.
Similiar to other countries in the Gulf region, Qatar’s debt capital markets are at a formation stage and the volume of its credit generation arises from bank lending.
So, It is the Qatari government’s large substructure and investment projects that empowered the country’s domestic credit to grow at a compound average rate of 30.9 % between years 2006 and 2012.
Managerial postpones with certain projects led to a noticeable retardation in lending in the first half of 2013, however, we look forward to a credit growth to speed up again in 2014, when major substructure projects begin in preparation for Qatar hosting the 2022 World Cup. We believe this will uphold the domestic require for credit in the country and support the lending activities of its Islamic banks.
However, rating agency questions if the Qatari Islamic banks can sustain their fast growth over the long term, once the government substructure projects retardation, since Qatar’s bankable population is limited, with a total population of less than two millions. Furthermore, exiles and foreign workers represent a primary portion of this number, and tend to have rather confined resources in the Qatari banking system.