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The Economy of Qatar Continues to Grow in Spite of Bad Debt

Qatar : 21 July 2010

The economy of Qatar has grown steadily at about 17.4% over the last 5 years. Furthermore, the Doha Bank which is based in Qatar has just announced second quarter (Q2) profits that are higher than analysts expected.

Analysts reportedly expected their profits would be on average, QR274.7-million, while in fact they have averaged QR299.7-million.

On the down side, the net profit for Q2 is 5.4% down from Q2 net profits that were posted this time last year.

The reason for this drop has been blamed partly on a rise of bad debt, particularly in the realm of loan repayments. Bad loans in Qatar have risen from QR851-million at the end of December last year, to QR1.04-billion at the end of June this year.

According to Doha Bank, bad loans made up 3.8% of all the loans and advance monies paid out during 2010. On Monday the shares of the Doha Bank reportedly closed at QR44, which represented a decline of 0.68%.

Faisal Hasan who is the head of research projects at the Global Investment House which is based in Kuwait, maintains the banking sector in Qatar is nevertheless positive. This, he asserts, is largely because projects planned for the public sector in Qatar are sure to make an impact. He said expectations were that there would be a “good credit growth” in Qatar in the “short to medium term”.

Hasan added that it would be necessary for the research team to “look at the provisions”. From this they could assess whether further provisions had been planned for the next few quarters, he said.

Several months ago, in March, the central bank of Qatar announced, banks were to be permitted to modify and broaden the base of their revenue and in this way, strengthen their income for trading by purchasing shares of companies that were listed on the stock exchange or bourse, this way enabling them to re-enter brokerage deals and operations.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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