Qatar: Revenues of Islamic finance companies increase by 7.7%

PHOTO

Doha, Qatar: The revenues of Islamic finance companies in Qatar increased in last year by 7.7 percent, amounting to QR241.8m.

The revenues of finance activities accounted for 83 percent of the total revenues. The performance was uneven among these companies. First Finance achieved a growth in revenue by 8.4 percent, while Al Jazeera revenues grew by 7.2 percent, and Qatar Finance House revenues decreased by 23.9 percent, annual report on Islamic Finance in Qatar 2023 has revealed.

The business results of Islamic finance companies varied in 2023, where Al Jazeera Finance achieved profit growth of 102.4 percent compared to 2022, with a net profit of QR58.1m. First Finance profits grew by 7.4 percent, reaching QR104.2m, while Qatar Finance House losses reached around QR10.4m.

By the end of the last year, the assets of Islamic finance companies in Qatar amounted to QR2.5bn marginally increasing by 0.8 percent compared to 2022.

Growth in the assets of Al Jazeera was 1.3 percent, First Finance assets by 1.2 percent, while Qatar Finance House decreased by 8.9 percent.

Meanwhile the assets of Islamic investment companies increased in last year by 2.7 percent, amounting to QR522.3m. The assets of the Investment House Company amounted to QR84m, with a growth rate of 12 percent, while the assets of the First Investor amounted to QR438.3m, an increase of 1 percent compared to 2022.

During the period 2019-2023, the compound growth rate of the total assets of the companies was negative at 1.9 percent, with a variation in the compound growth rate during the period for each of the two companies. It was positive and amounted to 8.7 percent at Investment House, and negative at the First Investor at a rate of 3.4 percent during that period.

According to quarterly data issued by Qatar Central Bank, financing provided by Islamic banks in last year amounted QR382.7bn, recording an insignificant increase of 0.6 percent compared to 2022, while credit facilities to conventional commercial banks increased by 3.4 percent.

In 2023, Islamic banks experienced significant growth in financing, particularly in the services and general trading sectors, which saw an increase of 15.8 percent and 10.6 percent, respectively. Consumption sector finance increased by 8 percent, however, the real estate and industry sectors experienced a decline of 17.1 percent and 16.2 percent, respectively.

The financing of Islamic banks accounted for 30 percent of the total financing of the banking sector in the year 2023, and during the period 2019-2023 the compound annual growth rate of total financing in Islamic banks was 5.8 percent compared to 3.8 percent in conventional commercial banks.

As for the contribution of Islamic banks in financing various sectors in 2023, the report stated, “we find that the consumer sector represented the largest sector financed by Islamic banks, as it acquired 62 percent of the total financing of commercial banks (Islamic and conventional), followed by the real estate sector by 42 percent, the construction sector 40 percent, and the industry sector 36 percent.”

Most of the financing of Islamic banks is directed towards the local market, at a rate of 96 percent of their total financing, compared to 95 percent of the financing of traditional commercial banks, directed towards the local market.