Domestic banks’ cross-border assets concentrate in Europe

Qatar banking sector’s assets outside the country grew after a considerable decline in 2017, in the aftermath of the blockade. Cross border investments also improved in 2018.  Qatar Central Bank data on geographical distribution of cross border assets from domestic banks shows they have increased their assets outside Qatar by around 2 percent in 2018.

Cross border liabilities of the banking sector rebounded strongly after a significant decline in 2017. The improvement in banking sector liabilities is broad based where all the components of cross-border liabilities increased substantially.

The rebound in non-resident deposits provided the growth momentum while placements and borrowings from the foreign financial institutions also improved quiet substantially. This increase in funded liabilities from outside Qatar reflects confidence of the international investors and financial institutions in the Qatari banking sector. The increase in cross-border liabilities leads to an increase in the share of this liability class from 26.5 percent in 2017 to 30.5 percent in 2018.

The geographical distribution of cross border assets of domestic banks shows the increase was solely concentrated in European countries, while assets with other regions have declined. Among the geographical region, assets with GCC region declined the most by around 18 percent.

Assets with European region increased significantly by 32 percent. Accordingly, the share of domestic banks assets with Europe increased to 38.7 percent in 2018,  from 30.1 percent in 2017.

Share of assets in GCC countries have reduced by around 4 percent points. Among the various asset class, credit declined the most by 11 percent, contributed mainly by decline of credit provided to Gcc countries (20 percent) and ‘other countries’ (24 percent).

However, credit provided to European region increased by 21 percent.  On the contrary, assets with financial institutions increased by 43 percent supported by a substantial growth of 88 percent to European region.  Assets with financial institution in GCC region and other Mena region declined considerably during the year. Investment asset grew by 3 percent on account of 20 percent growth in investment assets in other Mena region.

On liability side, domestic banks liability to outside Qatar increased heavily by around 22 percent in 2018.  Except for GCC region, liability to all other region increased. Liability with European region increased the most by 40 percent while liability to ‘other countries’ increased by 21 percent.

Consequently, the share of European region increased from 48.6 percent in 2017 to 56.2 percent in 2018.  Liabilities to GCC region declined to 11 percent from 18.8 percent.  Customer deposits from European region increased by 56 percent. Increase from  N. American region was another 32 percent, while from ‘other countries’ it increased by 39 percent. Decline in customer deposits was only from the GCC region (29 percent).

Source from: The Peninsula Qatar