Personal loans disbursed by Qatari banks have reached QR56.74bn in March, QNB Capital said in its first Qatar Economic Review.
With a share of 27.3%, personal loans have accounted for the largest portion of domestic credit extended by local lenders up to March this year, the report said.
The disbursement of personal loans in Qatar increased four-fold between 2003 and 2008, from QR11.5bn to QR56.77bn, QNB Capital said, citing Qatar Central Bank figures.
There was still demand for mortgage, vehicle, and equipment finance though the global economic slowdown had decelerated the rate of growth in the personal loan portfolio in Qatar, QNB economists said.
The report, however, cites a decline in the total domestic credit in the country in the first quarter of this year. The total domestic credit fell 5.9% to QR207.8bn in March compared with QR220.8bn in December, 2008. This has clearly been due to the knock-on effect on the local economy because of the global financial turmoil.
Interestingly, the credit off-take has come at a time when the cost of borrowing remains high. The QCB’s lending rate (which sets the benchmark for lending by local banks) went up from 1.33% in 2003 to 5.5% in March this year.
But the higher cost of borrowing has not kept away potential loan seekers in the country, perhaps indicating their “increasing repayment potential”.
“The wages have certainly gone up in the country of late, though they may not have matched the actual cost of living in many cases. With better wages, many people are now going in for new homes, equipment and cars,” an economist said.
The review indicates domestic credit facilities to the public sector declined by 39% to QR37.02bn in the first quarter of this year.
The share of credit facilities to the public sector as a percentage of total domestic credit facilities has been declining from 46% in 2003 to 24.5% in 2007.
“This is because the public sector continues to use short to medium term financing for its various development projects. The government finances had witnessed a stark improvement thanks to its successful economic
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