Font Size

- Aa +

Thu 14 Apr 2011 11:08 AM

Font Size

- Aa +

Qatar's new banking rules may slow growth, Credit Suisse says

Qatar’s new regulations on personal borrowings may slow growth and profits at country's banks

Qatar's new banking rules may slow growth, Credit Suisse says
GROWTH OBSTACLE Qatar’s new regulations on personal borrowings may slow growth and profits at banks, according to Credit Suisse (Getty Images)

Qatar’s new regulations on personal borrowings may slow growth and profits at banks such as Commercial Bank of Qatar and Doha Bank, according to Credit Suisse Group.

Commercial Bank, the nation’s second-biggest bank by assets, and Doha Bank, the third-largest lender, had their stock recommendations cut to “neutral” from “outperform,” Mohamad Hawa, London-based research analyst at Credit Suisse, wrote in a report on Wednesday.

“We adjust our key forecasts and cut loan growth for Commercial Bank to 5.1 percent this year and Doha to 3.2 percent,” Hawa wrote. The bank lowered the 2011-2012 cumulative earnings estimates by 15.4 percent, he said.

Qatari citizens can borrow no more than QR2m ($549,254) on loans with a maximum maturity of six years, Al Sharq reported April 11, without saying how it obtained the information. Residents can borrow as much as QR400,000 on loans of no more than four years. The interest rate was capped at 6.5 percent, the newspaper said.

A 1 percent lower yield on the retail loan book would erode the net income of Qatar National Bank, the country’s biggest lender by assets, by 2.5 percent, Credit Suisse said. Commercial Bank’s profit would reduce by 4.3 percent and Doha Bank’s earnings by 8.4 percent, Hawa wrote. Doha Bank has the highest exposure to personal lending with 31 percent of total loan book.

Qatar National Bank said April 11 the lender complied with the central bank’s directive on loans granted against salaries, including reducing the interest rate charged on loans granted against salary to be at a maximum of 6.5 percent.

For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.