Qatar’s decision to restrict Islamic banking and introduce limits on consumer borrowing may reduce profit by as much as 22 percent for banks in the world’s fastest-growing economy.
Net income estimates for Commercial Bank of Qatar QSC, the nation’s second-largest bank, were cut 22 percent, or 478 million riyals ($131 million) on the rule changes by analysts at Credit Suisse Group AG (CSGN) last month. They also cut their estimates for Doha Bank QSC (DHBK), the fourth-biggest lender, by 10 percent, according to a report to clients. Qatar National Bank SAQ (QNBK), the country’s biggest lender by assets, will be hurt by slower loan growth and a disruption to its strategy from the decision, Nomura International Plc analysts said last month.
The central bank in February told all conventional lenders to wind down their Islamic banking divisions and to stop taking Islamic deposits immediately on concern they may be using funds from the conventional bank for Islamic loans. The regulator last month also reduced the amount banks can lend to Qataris to 2 million riyals from 2.5 million and to foreigners to 400,000 riyals and limited the interest lenders can charge on the loans to 1.5 percentage points over the bank rate, at 5 percent today.
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