The outlook on Qatar's banking system is stable, reflecting Qatar's strong macro environment and high public spending levels that will continue to sustain growth and bank lending activity over the 12-18 month outlook period, says Moody's Investors Service in a new Banking System Outlook published on Thursday. Moody's says that the stable outlook also captures (i) the banks' limited asset-quality pressures and healthy capitalization levels; (ii) a stable deposit base and significant liquidity buffers; and (iii) strong earnings potential.
The report also notes that these supportive factors are counterbalanced by (i) high levels of concentrations on both sides of the balance sheet;
(ii) the banks' dependence on the domestic economy, which is undiversified and heavily reliant on the oil and gas sector; and (iii) the credit risks relating to exposures to the construction and real-estate sector.
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