Posted on September 22, 2014

The loan book increased by 0.8% MoM (up 5.9% YTD) while deposits increased by 1.3% MoM (+6.3% YTD) in the month of August 2014. After posting a decline of 1.0% MoM in July 2014 (primarily due to Ramadan and summer lull, public sector declined by 4.4% MoM in July 2014), loans increased by 0.8% MoM with private sector growing by 2.4% MoM.

Deposits also increased by 1.3% MoM (deposits declined by 2.7% MoM in July, with public sector deposits declining by 3.8% MoM). Thus, the LDR declined to 105% vs. 106% in July. Going forward, post the summer lull, we expect increased activity in the sector. We expect improvement in the public sector, in addition to large corporate loan growth to be the primary drivers of the overall loan book in 2014 followed by the SMEs and consumer lending. Our view is based on the expected uptick in project mobilizations in the coming months.

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The public sector deposits increased by 0.7% MoM (+2.0 YTD 2014) for the month of August 2014. Delving into segment details, the government institutions’ segment (represents ~58% of public sector deposits) improved by 6.2% MoM (+8.5% YTD 2014). Moreover, the semi-government institutions’ segment posted a growth of 5.6% MoM (down 19.4% YTD 2014). On the other hand, the government segment  decreased by 10.1% MoM (+1.8% YTD). Private sector deposits grew by 1.4% MoM (+10.5% YTD 2014). On the private sector front, the companies & institutions’ segment increased by 4.1% MoM (+12.7% YTD 2014) while the consumer segment receded by 1.1% MoM (+8.4% YTD 2014).

QNBFS monthly banking sector 2 [].jpgThe overall loan book increased by 0.8% MoM after a decline of 1.0% MoM in July 2014. International credit, decreased by 6.6% MoM (+26.8% YTD 2014). Total domestic public sector loans grew by 0.5% MoM and is down 3.7% YTD. The government segment’s loan book grew by 1.1% MoM (down 0.8% YTD 2014). Moreover, the government institutions’ segment (represents ~61% of public sector loans) grew by 0.7% MoM and is down 8.4% YTD. However, the semi-government institutions’ segment declined by 1.3% MoM (+13.8% YTD). Private sector loans gained by 2.4% MoM and are up 10.8% YTD. Services segment also posted a growth of 7.8% MoM and is up 22.7% in the first eight months of 2014. Consumption & Others (contributes ~30% to private sector loans) increased by 2.0% MoM (+13.9% YTD). Furthermore, the Real Estate segment (contributes ~26% to private sector loans) grew by 0.9% MoM (+1.4% YTD). Overall, Services (+22.7% YTD) and Contractors (+17.1% YTD) segments are the best performing segments in the private sector YTD. 

QNBFS monthly banking sector 3 [].jpg