The local banking sector marginally upped term lending rates and lowered deposit margins last year to help offset possible losses in the wake of the global financial turmoil.
They also raised service charges exorbitantly in 2009 but were forced to lower them after the banking regulator, Qatar Central Bank (QCB), acted tough and asked them to stop exploiting the hapless customer.
The rate offered by the banks on term deposits averaged 3.53 percent in 2009, slightly less than the 3.86 percent in the previous year.
On the other hand, the margins they offered for term loans averaged 8.53 percent, marginally more than 8.13 percent in 2008.
Thus the gap between lending and deposit margins reached a yawning gap of five percent in the year. Both deposits and credit facilities of the sector, grew considerably in 2009 helping the sector make more profits.
Deposits rose over 15 percent last year, from QR212.47bn in 2008 to QR246.86bn, while loans soared a little more than 10 percent to QR270.47bn (from QR242.65bn in 2008).
Figures released by the QCB show that the banks raised term lending rates on loans for one year to three years and more to over nine percent in November last year from under-nine percent in the previous months.
At the same time, they slightly lowered margins on deposits for one to three months as well as on those for more than a year. The interest on car loans was marginally lower last year.
The yearly averages of car loans for 2009 and 2008 were 8.48 percent and 8.81 percent, respectively. But the margins on this segment of the much-touted ‘soft loans’ soared to as high as 10.98 percent in January and 10.15 percent in August of last year.
Credit card facilities continue to attract double digit interest rates at over 20 percent, but they peaked at incredibly higher levels of over 21 and 22 percent between January and June of 2009.
Savings accounts continue to attract low interest rates but the margins, thankfully, inched up slightly at the close of 2009 to 2.01 percent from a poor 1.55 percent in the preceding months.
And it is interesting to note that total lending by Qatari banks at the end of 2009 was less than their deposits. Credit facilities offered by the local banks was to the tune of QR257bn, while their deposits totalled QR226.5bn
Foreign banks were cautious in lending as their deposits (QR20.4bn) far exceeded their loan portfolios (QR14.19bn).