New market data suggests that Qatari bank lending is expected to rebound as the tiny Gulf state is all set to pump billions into various infrastructure projects.
For the second half of the current year, QNB, the Middle East’s largest lender, has raised its growth in loan projections by up to 17 percent. According to Bloomberg data, thirty eight banks in the GCC had reported a growth in first quarter total loans by about 19 percent. The figures are encouraging for Qatari banks, who have been struggling due to shrinking lending margins due to a slowdown in economic and credit loan growth.
According to Bobby Sarkar, head of research at QNB Financial Services, there “will see a pickup in terms of lending activity but we don’t expect to see that happen before the fourth quarter. Metro projects were announced and given out ahead of what people were expecting. The contracts were awarded by June, and these are one of the first projects that will be doled out in the run-up to the World Cup.”
The Gulf state, which was controversially awarded the FIFA World Cup in 2010, is all set to undertake ambitious projects for the mega sporting event. Enjoying a period of revived economic growth due to record high oil prices, the government is expected to invest up to USD 200 billion in infrastructure projects before the 2022 soccer World Cup. Some major projects include the Doha Metro Scheme, development of new Hamad International Airport and several other football stadiums.
The demand for residences and hotel rooms in Qatar is likely to come under tremendous pressure in the wake of FIFA World Cup 2022. To meet the growing housing requirement, Qatar has dedicated 40 percent of its budget till 2016 to infrastructure projects. These projects would also allow Qatar, currently the world’s top liquefied natural gas exporter, to diversify its economy and reduce reliance on income from gas exports.