Growing confidence in the stability of Qatar’s banking sector, seen in the 2021 QCB Risk Perceptions Survey

Half of local banks “expressed their opinion of an increase in confidence in the stability” of the country’s banking sector in the Qatar Central Bank’s 2021 Risk Perception Survey (RPS).
The rest of respondents “observed that their confidence in stability” remains unchanged, the QCB said in its latest financial stability report.
Of the seven global risks identified, almost all local banks reported that Covid-19 pandemic risk was among the top two risks in 2021.
However, in 2022 the perception of most of these banks has changed, the QCB said.
Only 35% of respondents believed that the pandemic will continue to be among the top two risks in 2022.
Among other global risks, 41% of respondents rated “falling energy prices” as one of the top two risks in 2020.
The percentage of respondents with this perception, however, fell to 30%-35% in 2021 and 2022, the QCB noted.
The risk related to the expected global slowdown is considered one of the top two risks in 2021 and 2022 by around 50% of respondents.
Of the six macro risks cited, “reduced market liquidity” and “lower domestic growth” were considered among the top two risks by more than 50% of respondents in 2020.
In both 2021 and 2022, nearly 70% of respondents rated the risk of “weaker domestic growth” as the top or top two risks.
The QCB survey also “captured banks’ perception” of major risk events from the given set of events regarding credit, liquidity, market and operational risks.
Among the vulnerabilities cited, “real estate developer default” and “large borrower default” are considered by the majority of banks as the main risk factors.
In the case of liquidity risk, “wholesale depositor withdrawal of deposits” was considered to be the main risk factor.
Among the market risk factors given, the perception of banks differs and none of the risk factors is considered a major risk by more than 50% of respondents in 2021 and 2022, notes the QCB.
However, in 2020, exchange rate risk was rated as the top one or two risks by around 55% of respondents.
Similar to the previous year’s surveys, a large majority of banks consider “cyber world risks” to be the top risk factor, while other risk factors are rated as top risks by less than 40% of respondents , according to the survey.
According to the QCB, perceptions of the banking sector regarding potential vulnerabilities that may affect the sector lead to the formulation of a financial stability policy.
This was the aim of the Risk Perception Survey (RPS) conducted among banks operating locally under the jurisdiction of the QCB early last year.
Based on the responses received, the analysis brought together banking sectors’ expectations and perceptions of risk factors in 2020, 2021 and 2022, the QCB noted.

Martin E. Berry