Qatar’s Islamic finance assets grow to QR528 bn in 2020: QCB governor

June 13, 2021

Islamic finance in Qatar is witnessing a steady development through policies and regulations that are being updated to ensure its continued competitiveness at both regional and international levels, Qatar Central Bank (QCB) Governor Sheikh Abdullah bin Saud Al Thani has said.
In his introductory speech to Bait Al Mashura Finance Consultation’s Islamic Finance in Qatar report released on Saturday, the QCB governor said, “Islamic finance assets in Qatar amounted to QR528 billion ($144 billion), 86 percent out of which are Islamic bank assets, existing Sukuk accounted for 12 percent, assets of Takaful insurance companies accounted for approximately 1 percent, and assets of investment funds and other Islamic financial institutions accounted for approximately 1 percent. Upon successfully completing Dukhan Bank merger, Masraf Al Rayan has recently sought another merger with Khaleeji Commercial Bank to boost the strength of Qatari Islamic banks worldwide. Such a new banking entity is expected to be the fifth-largest Islamic bank in the world with assets amounting to $47 billion.”
The Islamic finance in Qatar report, which discusses the business results of Islamic financial institutions in Qatar for the year 2020, aims at providing a knowledge base for institutions, researchers and those interested in the local Islamic finance sector.
According to the report, assets of Islamic banks grew in 2020 by 8.4 percent and deposits grew by 8.7 percent with the private sector’s deposits accounting for 56 percent. It is also noticed that non-resident deposits came back and exceeded pre-crisis rates of 2017. Financing grew by 7.9 percent concentrated in government, semi-government, real estate and personal finance sectors.
In 2020, the governor said, the global economy as well as the financial and banking sectors have gone through an unprecedented crisis due to the COVID-19 pandemic.
“It posed a new challenge to the financial and banking system in Qatar. Thanks to the measures that focused on ensuring business continuity, supporting liquidity and providing support to affected sectors, we managed to mitigate the implications of this shock, maintain credit flow to economic sectors, and achieve financial and banking stability in the country”, he said.
“During this crisis, banks witnessed pressures on their systems and budgets through the required harmonization between continued credit granting, asset reclassification and provisions for credit losses. Banks in Qatar continued to apply the accounting standard for calculating provision for expected credit losses, and to update the structures of scenarios used to determine credit losses in a more conservative view. Nevertheless, the results of banking sector came good, as banks maintained their asset quality standards and credit grew at 8.6 percent,” the governor said.
“Financial technology is no longer an option, but an urgent necessity. This crisis also revealed to us the Qatari banking sector’s ability to quickly adapt to these changes by adopting technological solutions according to the best technical standards and protectionist and supervisory controls. Banks and other financial institutions managed to smoothly and safely provide their services through their applications,” he said.
“During this year, we launched many central financial technology systems including the Qatar Mobile Payment System (QMP) to continue developing the financial and banking environment in Qatar in order to achieve the goals of Qatar National Vision 2030,” the governor said.

Commenting on the report, Bait Al Mashura Finance Consultations Vice Chairman Khaled bin Ibrahim Al Sulaiti said, “The Islamic finance sector has shown flexibility and solidity in facing COVID-19 repercussions in light of the sector’s great digital transformation, which produces new opportunities for growth.”
“The report on Islamic finance in Qatar for 2020 issued by Bait Al-Mashura Finance Consultations reviews the performance of Islamic finance institutions in Qatar, including Islamic banks, Takaful insurance companies, and Islamic finance and investment companies. It also reviews Islamic financial products, including investment funds, Sukuk and movement of Islamic financial market,” he said.
“We have taken upon ourselves at Bait Al Mashura to strive to continuously improve and develop our products, in order to provide the best and highest quality service to the Islamic financial industry and the community inside and outside Qatar. As we present this effort, we invite researchers, specialists and pioneers of Islamic finance to intensify efforts to upgrade the Islamic finance industry through their research efforts and creative ideas that believe in the authenticity of Islamic economy and its role in leading the financial industry and overcoming crises,” he said.
“The report shows that COVID-19 had adverse impact on the global economy and the financial and banking systems. Global Islamic finance sectors have been affected to varying degrees. Thanks to the policies, procedures and package of incentives provided by Qatar, pandemic’s implications and repercussions on economic sectors and financial and monetary sector have been mitigated,” he said.
Although revenues grew by 3.4 percent, the report said, profits decreased by 2.6 percent affected by the increased provisions for expected credit losses. Such profits amounted to QR6.7 billion compared to QR6.9 billion in 2019.
In Takaful insurance sector, the assets of insurance policyholders amounted to QR2.2 billion, down by 4.6 percent. Insurance subscriptions amounted to QR1.3 billion with a marginal decrease of 0.1 percent. Due to the decrease in insurance claims as a result of lock-down, closure and restriction of public movement, insurance surpluses increased in these companies to reach QR149 million.
The report indicates that the assets of Islamic finance companies reached QR2.6 billion. Revenues amounted to QR242 million, 96 percent out of which are revenues of finance activities. In the Islamic investment companies sector, the performance of the two investment companies varied between growth and decline. Assets of the two companies amounted to approximately QR540 million and revenues reached approximately QR29 million.
In the field of Sukuk, no governmental Sukuk were issued in 2020. Islamic banks issued approximately QR8 billion worth of Sukuk. The total assets of investment funds reached approximately QR895 million. All these funds performed positively in 2020.
“Despite the decline that hit QE Al Rayyan Islamic Index at the beginning of 2020 due to pandemic’s repercussions, and thanks to the economic incentives that were taken, the Index re-rose to close up by 8.06 percent compared to 2019,” the report said.
The report indicates that the Islamic financial sector in Qatar is diversified into four main sectors, namely: Islamic banks, Takaful insurance companies, Islamic finance companies, and Islamic investment companies, in addition to Islamic finance products represented in Sukuk, investment funds and Islamic indices. These institutions operating in these financial sectors are subject to direct supervision by Qatar Central Bank. In addition, some financial institutions practice Islamic finance activities within the framework of Qatar Financial Center.
The report notes that the banking sector in Qatar includes four Islamic banks out of seventeen banks, including five traditional domestic commercial banks, a specialised bank (Qatar Development Bank), and seven branches of traditional foreign banks, in addition to a representative office for a foreign bank. Qatari Islamic banks operate through a network of internal and external branches of more than 70 branches and offices.
According to the report, many insurance companies operate under the supervision of Qatar Central Bank, including five independent Takaful insurance companies, namely: Qatar Islamic Insurance Company, Alkhaleej Takaful Insurance Company, Damaan Islamic Insurance (Beema), General Takaful Company of the General Insurance and Reinsurance Company, and Doha Takaful Company of Doha Insurance Group. Five national domestic insurance companies and four branches of foreign traditional insurance companies also operate in this sector, in addition to representatives of four domestic insurance companies.
Under the supervision of Qatar Central Bank, there are three Islamic finance companies, two investment companies and five Islamic investment funds, namely Al Bait Al Mali Fund, Al Rayan GCC Fund, Al Rayan GCC Fund, TFI GCC Equity Opportunities Fund and Al Rayan Qatar ETF. These funds carry out their activities inside and outside Qatar. This is in addition to QE Al Rayan Islamic Index, which is a total return index that reflects the price performance and revenues of reinvesting dividends of the shares of listed companies.
In the field of Islamic finance consultations, Bait Al-Mashura Finance Consultations Company, the first finance consultations company authorised by the Qatar Central Bank, provides finance and investment consultation services.

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