COVID-19 impact: Qatari banks to see high provisioning costs in 2021 | ZAWYA MENA Edition

COVID-19 impact: Qatari banks to see high provisioning costs in 2021 | ZAWYA MENA Edition

Coronavirus pressures will keep provisioning costs high for Qatari banks this year as loan quality worsens, despite resilient 2020 results, Moody’s Investors Service said in a report published on Monday.

The combined net profit of the eight Qatari banks declined 12 percent year-over-year to 20.4 billion rials ($5.6 billion). The aggregate return on assets was 1.2 percent, compared with 1.4 percent in 2019.

Banks' total operating profit rose by 4 percent to 43.9 billion rials in 2020, up from 42.1 billion rials the previous year, boosted by higher net interest income of 9 percent. However, earnings were squeezed by an 11 percent decline in non-interest income.

The decline in bottom-line profitability mainly reflected higher pandemic related provisioning, which was partly offset by cost savings and higher net interest income.

“Although Qatari banks reported resilient earnings in 2020 with the pandemic’s added pressure on profits, we expect provisioning costs to remain high in 2021,” says Nitish Bhojnagarwala, Vice President – Senior Credit Officer at Moody’s Investors Service.