Fitch: Banks' Impact From Qatar Boycott Hinges on Funding Mix

Fitch: Banks' Impact From Qatar Boycott Hinges on Funding Mix:

"Qatari banks' funding and liquidity are under varying degrees of pressure from outflows of non-domestic deposits and interbank borrowings, after several Arab countries severed diplomatic and logistical ties with Qatar in June, Fitch Ratings says. The boycott will also increase banks' financing costs in the international debt markets. The overall impact on each bank will depend on how much it relies 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. 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. Banks that have been more reliant on non-domestic deposits will need to price generously to attract domestic deposits away from other banks as these tend to be fairly stable - it is easier to keep or roll over existing deposits than to attract new ones. Deposits represent 75% of Qatari banks' non-equity funding. "



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