Boston, MA -- (SBWIRE) -- 09/25/2012 -- BMI View: We see both credit and total asset growth in the Qatari banking sector slowing in 2012, as base effects and a relatively high loans-to-deposits ratio weigh on banks' sources of financing. That said, with domestic demand for new loans set to remain high, we expect credit growth to continue outpacing growth in the sector's securities portfolio throughout the year. The Qatari commercial banking sector continues to benefit from the country's ongoing economic boom. Credit growth has recovered to pre-Arab Spring levels - coming in at over 20.0% y-o-y in each of the past three months - while the sector's sources of financing look broadly stable. Nevertheless, we expect total asset growth to moderate throughout the remainder of 2012. Base effects will see deposit growth slow, while an improving regional and global outlook will likely dilute the appeal of the country as a 'safe haven' economy. At the same time, a ramping up of loan financing last year and a relatively high loans-todeposits ratio could see banks toning down their reliance on borrowing to fund new lending. We forecast total asset growth to come in at 12.0% this year, compared with 21.5% in 2011. Deposit Growth Likely To Slow... Client deposits have been growing at a rapid clip in recent months. The total stock of deposits increased by 18.5% to QAR363.6bn (US$99.9bn) in 2011, bolstered by a robustly expanding economy (we estimate Qatar Commercial Banking Report Q2 2012 © Business Monitor International Ltd Page 36 real GDP growth came in at 17.5% last year) and the government's decision to implement an across-theboard pay hike of 60% for public sector employees in September last year. However, we expect deposit growth to moderate somewhat throughout 2012, owing mostly to base effects. We forecast real GDP growth to slow to 8.1% in 2012 as oil and gas production begins to level off, while the impact of one-off wage hikes will fade throughout the year. At the same time, at least some of the capital flowing into the banking sector last year was a result of Qatar's status as a 'safe haven' economy amid a highly uncertain regional and global macroeconomic backdrop. With political stability starting to look more assured in parts of the Middle East, and the global economic outlook also improving, this effect is likely to become less pronounced in the months ahead. In recent months, deposit growth - although volatile - has been trending down, coming in at just 4.5% yo- y in January, and averaging 11.8% y-o-y in the period November-January, compared with 20.3% in the three previous months. We expect these more moderate levels of growth to continue throughout the year, forecasting deposit growth to come in at 11.0% in 2012.

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