Qatar: Record outflow of non-resident deposits in June

The release of June monetary indicators in Qatar showed a decline in both foreign assets and foreign liabilities of the commercial banks, which was largely offset by rising domestic funding, from both government deposits and the central bank. 

Commercial banks’ balance sheets shrank by QAR 7.6bn in June.  Foreign assets declined –QAR 7.7bn as funds due from banks abroad and investments abroad declined.  Foreign liabilities of commercial banks fell -QAR 55.8bn in June, as non-resident deposits declined –QAR 13.9bn and funds due to banks abroad declined – QAR41.8bn.  As a result, Qatari banks’ net foreign assets position improved to –QAR 42.5bn at the end of June, compared with –QAR 55.7bn at the end of May.

The decline in external funding was offset by increased residents’ deposits and increased funds from the Qatar Central Bank (QCB).  Public sector deposits at commercial banks rose QAR 42.0bn last month, which was more than sufficient to offset both the drop in non-residents’ deposits and the -QAR 19.6bn outflow of resident private sector deposits.     

The commercial banks’ balance sheet also shows funds due to QCB jumping more than QAR 30bn in June, to reach QAR 34.2bn at the end of last month.  This helped to replace the loans due to banks abroad that were repaid or withdrawn following the imposition of trade sanctions by Saudi Arabia, the UAE, Bahrain and Egypt. 

QCB’s net foreign assets declined –USD 10.4bn in June.  

The central bank’s balance sheet shows a decline of –USD 9.1bn in holdings of foreign securities and a –USD 1.3bn drop in cash balances with foreign banks.  All of this (and more) appears to have been deposited at local banks last month: QCB balances with local banks increased by QAR 48bn (USD 13.2bn). 

The total size of QCB’s balance sheet increased by QAR 10bn last month. 

Broad money supply growth accelerated in July

M2 grew 2.2% m/m and 7.7% y/y in June, reflecting higher cash in circulation as well as the overall increase in bank deposits last month. While bank loans to the private sector increased 1.8% m/m and 7.4% y/y, lending to the public sector declined -4.2% m/m.  On an annual basis however, public sector credit growth remained high at just under 20% y/y.   

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