Threat to Qatari banks' liquidity fading: Fitch

Qatari banks' overall funding increased slightly in August, according to a report released by Fitch, the first upward movement since the blockade began in June.

Funding by the Qatar Central Bank, which rose sharply in June, slowed in August, suggesting that banks no longer needed the support, the London-based agency said.

The cash outflow has been replaced largely by Qatari public-sector deposits, inflows from international asset managers, debt and issuance of Islamic sukuk bonds to international investors, Fitch said. 

Fitch warned however that "as long as the boycott continues, risks to funding remain, and higher funding costs are weighing on bank (profit) margins".

In June, Saudi Arabia, the United Arab Emirates, Egypt and Bahrain severed diplomatic ties with Qatar and imposed economic sanctions on Doha, accusing it of sponsoring Islamist extremists. Doha categorically denies the charges.

Last month, Moody's Investors Service estimated that around $30 billion were withdrawn from Qatar's banking system in June and July. 

Moody's estimated that Qatar used $38.5 billion - equivalent to 23 percent of its GDP - to support the economy in the first two months of sanctions.

Qatar National Bank, the emirate's largest lender, last week reported a healthy increase in the net profits for both the third quarter and the first nine months of the year.