Qatar Bank Liquidity Slumps in February After Deposits Decline

  • Loan-to-deposit ratio increased to 125.9% in February
  • Domestic bank deposits dropped 2.1% in February vs January

Qatar bank liquidity tightened in February as customer deposits declined and lending rose in the world’s biggest exporter of liquefied natural gas.

Domestic customer deposits dropped 2.1 percent from the previous month to 541.1 billion riyals ($149 billion), while credit facilities within the country climbed 1.2 percent to 681.4 billion riyals, according to data posted on the central bank’s website. Lenders’ loan-to-deposit ratio climbed to 125.9 percent from 121.8 percent in January, according to Bloomberg calculations.

Bank liquidity in Qatar, which may post a budget deficit of $13 billion this year, is tightening as energy revenue sinks. The three-month Qatar Interbank Offered Rate climbed to the highest level since 2011 in March, reflecting banks’ drop in cash holdings. Qatar National Bank SAQ, the country’s biggest lender, last week mandated Credit Agricole SA and Societe Generale SA to help raise a three-year 1.5 billion euro ($1.71 billion) loan.

Banks in the six-nation Gulf Cooperation Council are seeking deposits from other countries in the region and beyond after oil declined to near a 12-year low, Moody’s Investors Service said last month. The strong credit ratings of the biggest banks from the United Arab Emirates, Qatar and Kuwait are attracting funds from the U.S. and Europe to help compensate for the decline in government deposits, Khalid Ferdous Howladar, Moody’s senior credit officer, said at a conference in Dubai on March 21.

Money lent by Qatari banks as a percentage of their deposits is well above its neighbors, who have also suffered because of the plunge in oil. The ratio for Saudi Arabian banks was 88.1 percent in February, while the ratio for lenders in the U.A.E. was 102.2 percent, according to central bank data.

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