Islamic Banking Sector Assets Surge by 3.9% to QR585.5bn

Doha: The Islamic banking sector has witnessed robust growth over the past year.

It has sustained its growth rate despite global volatility. Economic growth and diversification have been strong drivers of the development and expansion of this sector in Qatar.

The Islamic banking sector, assets expanded by 3.9 percent in last year, totaling QR585.5bn. The deposits rose by 8.2 percent reaching QR339.1bn, with private sector deposits constituting 57 percent. 

The total financings reached QR401.5bn, an increase of 4.9 percent, predominantly directed towards the real state and government sectors respectively, and subsequently followed by personal finance.

Revenues posted a growth rate of 12.6 percent, amounting to QR29.5bn, while net profits reached QR8.7bn, equivalent to 6 percent increase, according to a recent report by by Bait Al Mashura Finance.

In view of the extent of the contribution made by Islamic banks, alongside the banking sector in Qatar, in financing various sectors, it is noted that the consumer sector constituted the largest sector.

This was financed by Islamic banks accounting for 64 percent of the total financing extended by commercial banks (both Islamic and conventional). 

This was followed by the contracting sector, with 44 percent, then the real estate sector, with 42 percent, and the industrial sector, with 34 percent.

It is further noted that the majority of financing extended by Islamic banks was directed toward the local market, accounting for 96 percent of their total financing portfolio, compared to 95 percent of the financing provided by conventional commercial banks being directed toward the local market.

The country’s economy has sustained its growth momentum at stable natural rates.

This performance is underpinned by expansive developments in natural gas production at the North Field, alongside marked progress in the tourism sector.

The monetary and banking sectors demonstrated continued stability, reinforcing their robustness and adaptability through strategic monetary policies and the directives of the Qatar National Vision 2030, the third phase of whose strategy was initiated this year.  

Within its financial and economic framework, the strategy aspires to foster sustainable economic growth by advancing a competitive, productive, and diversified economy that stimulates innovation.

It further aims to achieve fiscal sustainability by reinforcing the long-term stability, soundness, and resilience of the State’s public finances.

Qatar’s Islamic financial sector is diversified across four main components: Islamic banks, Takaful (Islamic insurance) companies, Islamic finance companies, and Islamic investment companies.

It also includes a range of Shariah-compliant financial instruments such as Sukuk, Islamic investment funds, and Islamic indices.

All institutions operating within these sectors are subject to direct supervision by the Qatar Central Bank (QCB).

Additionally, certain institutions conduct Islamic financial activities under the regulatory framework of the Qatar Financial Centre (QFC).

Meanwhile the Islamic banks in Qatar achieved total revenues amounting to QR29.5bn in the same period reflecting a growth rate of 12.6 percent compared to the year 2023. 

With a boost from hosting the FIFA World Cup in 2022, Qatar’s diversification efforts have significantly shifted its economic structure, with nonoil sectors contributing 64% to real GDP by Q3 2024, a rapid rise from 39% in 2013.

The financial sector’s contribution also rose, from 5% to 8% of real GDP.