Solid market share for Qatari Islamic banks

Solid market share for Qatari Islamic banks

Fitch Ratings-London/Dubai: Islamic banking made up 25% of total banking sector assets in Qatar at end-1Q23 (end-1Q22: 27%), making the country the fifth-largest Islamic banking market globally, says Fitch Ratings in a new dashboard. Fitch expects the market share to increase overall in 2023 due to high public demand and solid retail networks. However, Islamic banks’ total assets continued to shrink in 1Q23 (-3%) due to government repayments – a similar trend to in 2022 (-5%). Fitch expects the slightly improved profitability metrics, due to lower financing impairment charges and reasonable liquidity, to continue, with less non-domestic funding than for conventional banks. Capital buffers should remain adequate for the risks. Fitch also expects risks to asset quality to remain contained, although higher rates will start to put pressure on affordability. The Qatar central bank’s launch of Treasury sukuk in 2022 is a structural improvement as it adds to domestic Islamic banks’ short-term liquidity tools. The increasing availability of government sukuk and Islamic liquidity-management tools from the central bank support Islamic banks’ liquidity management and investment options. Fitch’s revision of the Outlooks on three Qatari Islamic banks to Positive from Stable in April reflected a higher probability of support from the