BY SACHIN KUMAR
DOHA: The trend of buying cars and consumption goods on loans is growing sharply in Qatar.
Consumption loans, which include personal loan, vehicle loan and credit card loan, stood at QR80.2bn in 2013, showing a surge of about 13 percent or QR9.2bn from the previous year.
Consumption loans by banks were worth about QR71bn in 2012, according to Qatar Central Bank data. “Rising population in Qatar has helped banks to expand their consumption loan portfolio. These loans are likely to show a healthy growth in coming years as population is likely to increase further,” said a senior official of a private bank.
The government, under its Qatar National Vision 2030, has launched infrastructure projects which have created huge demand for expatriates. The population jumped to around 2 million at the end December 2013 from around 1.8 million, reflecting a growth of 11 percent.
Another reason for the rise in consumption loans is the strategy of banks to increase profitability.
Personal loans, credit card loans and other consumption loans usually have higher rates of interest than housing or industrial loans. It is more beneficial for lenders to chase retail customers than giving loans to companies because of high profit margins in retail loans.
After witnessing decline in 2009, consumption loans have again started rising.
Banks were aggressively disbursing personal loans, vehicle loans, furniture and other consumption loans until 2008.
After the global economic crisis in 2008 that hit banks all over the globe, lenders in Qatar became cautious about consumption loans. Such loans by banks declined by six percent to QR53bn in 2009 from QR56.8bn in 2008. With economic recovery gaining momentum, consumption loans have been increasing. They grew by around five percent in 2012 compared to 2011. They also grew from QR68bn to QR71bn in 2012 as per the data. The growth was higher in 2012 as consumption loans rose by around 20 percent to QR68bn in 2012 from QR56.7bn in 2011.The Peninsula
