Posted on March 21, 2014

Deposit growth outpaced loan growth in the month of February. Loans climbed by 1 percent month-over-month (MoM) in February 2014. This is after a strong performance of 2.3 percent MoM in January 2014, QNB Financial Services’ (QNBFS) monthly banking update noted yesterday. However, deposits expanded by 3.9 percent MoM in February (+1 percent MoM in January 2014). Hence, the banking sector’s loan-to-deposit ratio (LDR) decreased to 104 percent at the end of February against 107 percent in January 2014. Going forward, QNBFS expects activity in the banking sector to pick up in the coming months with the public sector leading the way.

Public-sector led the deposit growth along with strong participation from the private sector. Public-sector deposits grew by 4.7 percent MoM (down 2.3 percent MoM in January 2014). The government institutions’ segment (represents 55 percent of public sector deposits) improved significantly by 3.3 percent MoM against a flat performance in the previous month. The government segment increased by 10.5 percent MoM against a 7.4 percent MoM decrease in the previous month. However, the semi-government institutions’ segment posted a 0.6 percent MoM decline continuing its trend as it declined by 1.3 percent MoM in January 2014. 

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Private sector deposits gained by another 4.1 percent MoM (+4.1 percent MoM in January 2014). On the private sector front, the companies and institutions’ segment expanded by 4.7 percent MoM (+4.2% MoM in January 2014) and the consumer segment expanded by 3.6 percent MoM (+4.0% MoM in January 2014). Overall, deposits are up 4.9 percent year-to-date (YTD) in 2014.

The overall loan book exhibited slight improvement in the second month of 2014. Total domestic public sector loans picked up by 1.8 percent MoM after a 1.7 percent MoM growth in January 2014. The government segment’s loan book grew by 8.2 percent MoM after a 4.2 percent MoM growth in January 2014. However, government institutions’ segment (represents 61 percent of public sector loans) declined by 1.6 percent MoM vs. a 1.0 percent MoM growth in January 2014.