S&P sees Qatar lenders’ profitability to remain strong

May 8, 2014 12:42 am

Global credit rating agency Standard & Poor’s (S&P) has said Qatari lenders’ profitability is likely to remain “strong” over the next 12 months, even as risks remain on “structural mismatches” in their balance sheets, credit concentration and the country’s heavy reliance on hydrocarbons, Gulf Times has reported. “High interest margins, although contracting; briskly increasing business volumes mainly on the back of the government’s investments; and banks’ generally low cost bases are the main factors fuelling this performance,” S&P credit analyst Mohamed Damak said in a report. S&P, however, warned that the normalisation of interest rates in the US within the next two years could be the most immediate damper on banks’ profitability. “A steep increase in the US interest rates could squeeze Qatari banks’ interest margins because of the structural mismatch of their balance sheets, which carry long-term assets and short-term deposits,” it said.