Commercial Bank of Qatar (CBQK) and Doha Bank (DHBK) announced that they will be raising QR2 billion ($548.7 million) each in Tier 1 bonds to improve their capital adequacy ratios (CARs), a report said.

The bonds will also provide additional funds aiding loan book growth, added the Monthly Banking Sector Update from Qatar National Bank (QNB) Financial Services.

Loans and deposits growth was flat in the month of November, the update said.

Loans declined by 0.1 per cent month-over-month (MoM) but are up 11.9 per cent year to date (YTD). Deposits also dipped by 0.2 per cent MoM (+16.4 per cent YTD) in the month of November 2013.

Activity in the banking sector will pick up in the coming months, according to the QNB update.

The banking sector’s loan-to-deposit ratio (LDR) remained at 107 per cent at the end of November 2013 vs. 107 per cent in October 2013.

Public sector deposits retreated by 5.0 per cent MoM (+28.1 per cent YTD), while private sector deposits gained by 3.7 per cent MoM (+15.1 per cent YTD). Delving into segment details, the government institutions segment (represents about58 per cent of public sector deposits) ticked up by 1.4 per cent (+27.6 YTD) vs. a 4.9 per cent decline in the previous month.

However, the government segment retracted its positive momentum, contracting by 16.4 per cent MoM but it is still up 44.1 per cent YTD, the update said.

The semi-government institutions segment followed in the footsteps of the government segment slipping by 4.2 per cent MoM (+7.4 per cent YTD). On the private sector front, the consumer segment expanded by 6.1 per cent MoM (+23.0 per cent YTD) and the companies & institutions segment ticked up by 1.2 per cent MoM (+7.5 per cent YTD).

The overall loan book exhibited flattish performance in the month of November, the update said.

Total domestic public sector loans declined by 1.1 per cent MoM after a robust performance in October. On a YTD basis, public sector loans are up 8.8 per cent. The government segment loan book contracted by 7.6 per cent MoM (+6.3 per cent YTD).

On the other hand, the government institutions’ segment (represents about 66 per cent of public sector loans) inched up by only 0.8 per cent MoM (+12.1 per cent YTD), the update said.

According to QNB, public sector loan growth will be the primary driver of the overall loan book in 2014.

QNB’s assumption is based on the expected uptick in project mobilizations in the coming months, the update said.

Private sector loans inched up by 0.9 per cent MoM (+12.2 per cent YTD). The Services segment posted the biggest growth, up 9.9 per cent MoM (+43.6 per cent YTD), while the Real Estate (contributes ~28 per cent to private sector loans) loan book retreated by 1.2 per cent MoM (down 3.1 per cent YTD). Consumption and others (contributes ~31 per cent to private sector loans) declined 1.5 per cent MoM (+13.5 per cent YTD).

Specific loan-loss provisioning stood at 1.4 per cent of average trailing 12-months loans vs. 1.4 per cent in October 2013, the QNB update said. – TradeArabia News Service