Decline of foreign deposits ‘pressure’ Qatari banks: Fitch

CAIRO – 23 August 2017: Outflow of foreign deposits from Qatari banks will put banking funding and liquidity under pressure, international credit rating agency, Fitch said.

In a Wednesday press release, Fitch explained that the Arab boycott of Qatar will increase banks' financing costs in the international debt markets.

The degree of impact on each bank will be different depending on how much they depend on non-domestic sources for its funding.

Banks with a greater reliance on non-domestic deposits include Ahli Bank, Al Khaliji, Commercial Bank, Doha Bank, and Qatar Islamic Bank, Fitch said, adding that banks with less reliance include Barwa Bank, International Bank of Qatar, and Qatar International Islamic Bank.

“Withdrawal of non-domestic deposits is likely to increase competition among banks for domestic deposits, pushing up funding costs and squeezing margins,” Fitch explained.

Supporting the domestic banks’ with funding and liquidity, the Qatar Investment Authority (QIA) and other Qatari public sector companies have deposited $12 billion in June and $7 billion in July in banks to offset negative impact.

Fitch believed that Qatar Central Bank has liquidized some of its reserves to support the country’s banks, which has pushed foreign reserves down to $24 billion by the end of June.
Qatar’s foreign deposits continued to fall in July as they dropped eight percent to record $43 billion, Qatar Central Bank (QCB) announced on Tuesday.

Total deposits, however, have hiked to QAR 772.5 billion ($212 billion) in July from QAR 770.7 billion, as a result of a $6.9 billion increase in the Qatari public sector's foreign currency deposits, which came after the government’s pumping of $10.9 billion in June.