The earning figures of Qatari banks are expected to come steady for the fourth quarter of 2014 as provisioning costs are likely to fall across the board , said a recent specilized economic report compiled by EFG- Hermes.

EFG said it forecasts average earnings growth of 14% Y-o-Y (-9% Q-o-Q) for Qatar banks under coverage.

As for CBQ’s Y-o-Y earnings growth, similarly to 3Q2014, should be strong driven by lower provisioning costs.

In respect to Masraf’s 4Q2014 earnings (+25% Y-o-Y on our estimates) are likely to be boosted by gains from the sale of the bank’s stake in Seef Lusail Real Estate last July.

EFG noted that loans to the public sector fell by 5.2% Y-o-Y in November 2014, compared to 10% Y-o-Y growth in December 2013, while loans to the private sector increased by 18.6% Y-o-Y in November 2014, compared to 16.8% Y-o-Y in December 2013.

At QNB , EFG said it expects the slowest loan growth at  (+9% Y-o-Y), due to its large exposure to the public sector and the impact of large public sector repayments, while Masraf’s and QIB’s loan growth should continue to outperform (+35% Y-o-Y).

EFG expects some further, slight pressure on net interest spreads, as lending pricing continues to be very competitive. On a Y-o-Y basis, asset yield pressure for Masraf and QIB is primarily due to the maturity of high yielding sukuks earlier in 2014 as according to the banks’ management the funding costs are not seeing material upward pressure despite the new 100% loan-to-deposit ratio ceiling which should have come into effect on 31 December 2014.

Credit quality trends have been fairly stable for most banks throughout the year, and we expect a decline in provisioning costs Y-o-Y on an aggregate basis, said EFG.

As for preferred stocks, EFG said QNB is currently its only Buy-rated stock in Qatar. In addition to QNB, it also favors CBQ going into the earnings season, with provisioning a potential area of positive earnings surprises.