“Qatari banks’ reliance on confidence-sensitive external funding has increased in recent years due to a significant decline in oil-related revenues” Nitish Bhojnagarwala, vice president at Moody’s, said in a statement. “This leaves them vulnerable to shifts in investor sentiment.”
The ratings agency said it expected Qatar’s gross domestic product growth would slow to 2.4 percent this year, down from around 13.3 percent over the 2006 to 2014 period, but it added that it was the fastest within the Gulf Cooperation Council amid government spending on construction related to hosting the FIFA World Cup in 2022.
Moody’s said the slowing economy would weigh on credit growth and asset quality.
“The gradual economic slowdown, combined with Qatar’s ongoing dispute with some neighboring countries and continued challenges in the construction and contracting sector, will lead asset quality to dip slightly,” it said.
It estimated system-wide problem loans would rise to 2.2 percent of gross loans by 2018, compared with 1.7 percent as of the end of last year.