QCB Governor: Qatari Banking Sector Remained One of Healthiest in GCC Region

Doha, November 23 (QNA) - Qatari banking sector remained one of the healthiest in the GCC region, said HE Governor of Qatar Central Bank (QCB) Sheikh Abdulla Bin Saoud Al-Thani. "Qatar Central Bank's recently-published financial stability report highlighted the Qatari banking sector remained as one of the healthiest in the GCC region," HE QCB Governor said in an interview ahead of the upcoming Euromoney Qatar Conference in December in Doha. HE Sheikh Abdulla Bin Saoud Al-Thani outlined the current strengths and advantages of Qatars banking sector, as well as the challenges he anticipates the nation's economy will face in the coming period. Asked about the role taken by QCB to support efforts urged by HH the Emir Sheikh Tamim bin Hamad Al-Thani in his inaugural address delivered during the ordinary session of the Advisory Council to eliminate the bureaucratic impediments facing investments and take additional efforts to stimulate the private sector, HE QCB Governor said: "Among the objectives of the governments diversification strategy is to facilitate the development of the private sector. In context of investment in financial sector, the Emir's Decree on increasing foreign ownership of listed companies to 49% for listed companies is an important measure, while maintaining an investment friendly environment and promoting opportunities for both domestic and foreign investors remains an important commitment." "In its recent Global Financial Stability report, the IMF has noted that financial Institutions in advanced economies face a number of cyclical and structural challenges. Weak profitability of the banks could erode the capital buffers overtime and undermine their ability to support growth," said HE Sheikh Abdulla. "Contrary to this, the banking sector in Qatar has remained healthy overall, with high capital ratios and a low level of delinquent loans. Needless to say, low oil prices have imparted some pressure on deposit mobilisation. However, Qatari banks were able to mobilise funds through other sources without impacting much on the cost or availability of credit." His Excellency added that banking sector could support higher credit demand from the private sector in tandem with the growth in non-hydrocarbon economy. Profitability of the banking sector also remained comfortable. In 2015, return on average assets (RoAA) stood at 2% in while return on average equity stood at 16.2%. Regarding the importance of data protection in the financial sector and the promotion of cybersecurity, HE Sheikh Abdulla said that Qatar Central Bank is constantly developing cybersecurity to protect the bank's systems as per the best recognized standards and studies, as well as calling upon global expertise towards placing QCB on the right track. QCB also permanently issues a number of policies and circulars for financial institutions relating to information security, monitoring their compliance with and implementation of such policies. QCB had established a high commission for information security in the financial sector, which includes members from all financial institutions in Qatar. One of the most important activities of this committee is to develop a unified strategy for information security in the financial sector, which will come into force during the next few months. HE Sheikh Abdulla further added that QCB organizes an annual information security conference for the financial sector. Cyber security experts from all over the world are invited to this conference and the conference brings most of the specialists from the GCC region and the world to share their experiences in the field of cyber security. On his viewpoints for next year with regard to the State of Qatar and the Economy in Qatar, His Excellency said Qatar's macroeconomic performance has been robust despite the recent oil price shock due to the early emphasis on the economic diversification strategy as part of QNV 2030 while its financial system remained resilient in view of sound regulations and supervision by the QCB and with government support. Governments economic diversification strategy is helping sustain growth. QCB's monetary policy remains accommodative and supportive of growth, he added. Regarding the aspects of change relating to the monetary policies in Qatar during 2017 in light of the continuous decrease in oil prices, HE QCB Governor said, in view of challenges arising from decrease in oil prices, and with the objective of realizing the QNV 2030 goals, Qatar's policy strategy has focused on: economic diversification and raising efficiency of public spending; managing liquidity proactively and maintaining an accommodative monetary policy stance to support growth; and strengthening macroprudential regulations and oversight and promoting financial stability. His Excellency said that Qatar Central Bank in coordination with other regulators is determined to provide necessary regulatory and financial infrastructure support to the banking sector for the overall development of the economy. "We have already implemented Basel III framework since 2014 and also strengthening macroprudential measures to promote financial stability. QCB has been proactively developing the government debt market and managing the liquidity to ensure the adequate availability of liquidity with the banks. Going forward, creating a conductive financial environment to support economic diversification while promoting monetary and financial stability is our paramount goal." Asked about the procedures undertake to encourage SMEs growth in Qatar considering the importance of this sector in Qatar long-term vision, His Excellency said: "An important initiative aimed at fostering the development of SMEs is the establishment of Qatar Development Bank. QDB, chaired by the QCB Governor, supports local industries by financing private sector SME projects. It also provides business advisory support. It is also aimed at facilitating economic diversification and development of private sector." Regarding the size of Government debts at banks deemed important and whether banks are required to lend more money to small enterprises, HE the QCB Governor: "In the region, QCB has been leading in the development of government debt market even when Government had surplus funds. Hence, the Government bonds and sukuk's within the banking sector remain limited and largely reflect the measures taken for development of government debt market for liquidity management. At a broader level, credit to public sector was the key driver of banking sectors asset growth until 2014. With the economic diversification drive coupled with the increase in involvement of the private sector in the economic development has changed the sectoral distribution of credit facilities provided by banks. Private sectors larger involvement in the development of the domestic economy translated into higher credit demand from the sector during 2015." He added that SMEs and micro level private enterprises have a lot of potential to grow and create jobs and is expected to translate into higher economic growth. As envisaged in our strategic plan, concentrated efforts are underway to promote this sector, by providing necessary financial support by the banks. A dedicated development bank has taken a lead role in this mission by offering a wide range of products and services to SME sector. In addition to various credit facilities, advisory support and guidance to SMEs regarding start up, growth and expansion of their activities as well as services to promote exports are being provided. His Excellency said the financial sector in Qatar has an important role to play in its transformation to an advanced country as envisaged in Qatar National Vision (QNV) 2030. In order to fulfil the goals set by QNV 2030, during 2013, QCB implemented a Strategic Plan (2013-16) in coordination with Qatar Financial Markets Authority (QFMA), and Qatar Financial Centre Regulatory Authority (QFCRA). The strategic plan aimed to enhance the regulation, expand macro prudential oversight and to strengthen financial market infrastructure among others. In line with the Strategic plan, we have implemented an array of regulation to support the financial stability and thereby to support sustainable economic growth. To cite some example, QCB has implemented Basel III guidelines on capital and liquidity requirements, and strengthened macro prudential measures and oversight, while an early warning system for the financial sector is being developed. In the context of economic development, HE Sheikh Abdulla said Qatar recognizes the importance of diversification of the economy, from being petro-chemical centric to other sectors, such as financial services, tourism and others. This is a gradual process and will require focus and determination with regard to challenges from global economic conditions and consequential difficulties arising domestically. (QNA)