The Banking Executive Magazine - February 2025 Issue

IMF IMF Finds Qatar Banks WELL-CAPITALISED, LIQUID AND PROFITABLE Since the implementation of the Qatar Central Bank measures to re- duce banks’ net short-term foreign li- abilities, banks’ non-resident deposits declined "significantly", and banks have lengthened the average matu- rity and diversified further. Qatar banks are well-capitalised, liq- uid, and profitable, with the capital adequacy ratio of close to 20% and return on equity of 14.5%, respec- tively, in the third quarter of 2024, according to the International Mon- etary Fund (IMF). Since the implementation of the Qatar Central Bank (QCB) measures to reduce banks’ net short-term for- eign liabilities, banks’ non-resident deposits declined "significantly", and banks have lengthened the average maturity and diversified further the sources of foreign funding, IMF said in its Article IV consultation report. The sector-wide NPL (non-perform- ing loans) ratio remained broadly un- changed at slightly below 4% and the provisioning coverage ratio is rel- atively high at above 80%, it said. The report highlighted that credit growth to the private sector is ex- pected to improve to 6.1% in 2025 compared to 5.5% in 2024 and 4.9% in 2023. The IMF directors supported Qatar's efforts to maintain financial stability and deepen domestic financial mar- kets, while encouraging them to con- sider undertaking a financial sector assessment programme update. They welcomed the newly intro- duced risk-based supervision and recommended formalising the finan- cial safety net and continuing to ad- just macro-prudential policies to mitigate potential macro-financial risks. They encouraged Qatar to sus- tain the progress in fighting financial crimes. The IMF directors also agreed that the exchange rate peg continues to serve Qatar well. They concurred that, as conditions allow, strengthen- ing the operational framework would further enhance monetary policy transmission. The QCB has broadly maintained the monetary policy in line with the US Federal Reserve, consistent with the currency peg to the dollar. The central bank's reserves stood at $25.4bn in 2024, equivalent to cover 7.9 months of next year's imports; against $24.5bn in 2023 (8 months) and $24.2bn in 2022 (8.1 months). ISSUE 194 FEBRUARY 2025 the BANKING EXECUTIVE 39