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S&P concerned about Qatari banking sector

Reports have stated the Qatari commercial sector continues to be more vulnerable than the country’s housing sector

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Reports have stated the Qatari commercial sector continues to be more vulnerable than the country’s housing sector.

In its Middle East Outlook, international rating agency S&P said the economic risks for the Qatari banking sector are average in global comparison since the country has diversified its economy despite continued dependence on oil and LNG production.

While the agency expects the real estate market to recover from its decline of 2009, the banking sector faces the risk of a relatively-weak commercial sector, given its focus on lending to sectors like real estate and construction. S&P expects lending growth to reduce to almost 15% in 2013 and the years ahead.

“Our assessment of industry risks reflects marginally stronger competitive dynamics and improved systemwide funding for Qatari banks,” said S&P credit analyst Timucin Engin. Qatar Central Bank is currently tightening regulation, which may further limit business and lending growth in the short to medium term.

“This capital injection was intended to strengthen banks’ balance sheets in view of Basel III requirements, and to enable them to fund higher loan growth ahead of the 2022 FIFA World Cup,” S&P said.

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