Qatari banks recorded a modest 1 per cent rise in combined net profit to 14.2 billion riyals ($3.9 billion) in the first half of 2025 as higher income was offset by increased costs and provisioning, Moody’s Ratings said in a sector update.
Aggregate operating income grew 5 per cent year on year, but was largely consumed by a 10 per cent rise in operating expenses and an 8 per cent increase in loan-loss provisioning charges. Net interest margins remained broadly stable at 2.2 per cent as funding costs and asset yields fell at a similar pace.
“However, we expect the combined impact of stable operating income, high provisioning costs resulting from the persistent pressure on the real estate and contracting sectors and growing operating expenses from investment in digital services and technology to pressure Qatari banks’ profitability in H2 2025,” said Francesca Paolino, Assistant Vice President-Analyst at Moody’s Ratings.
Return on assets edged down to 1.2 per cent in H1 from 1.3 per cent a year earlier, reflecting profit growth lagging behind total asset expansion of 8 per cent. Provisioning costs remained elevated at 0.8 per cent of gross loans, with exposures to the real estate and contracting sectors weighing on asset quality. The banks’ problem loan ratio eased to 2.8 per cent as of June 2025, down from 3.0 per cent a year earlier, helped by loan growth and improved coverage ratios of 138 per cent.
Non-interest income rose 4 per cent, driven by a 12 per cent increase in fees and commissions, which offset weaker foreign-exchange income. Operating efficiency slipped, with the cost-to-income ratio climbing to 25.2 per cent from 24 per cent in the first half of 2024.
Despite these pressures, Moody’s said capital buffers remained strong, with tangible common equity stable at 16.5 per cent of risk-weighted assets, underpinned by profit retention.
The agency expects non-hydrocarbon GDP growth of 3.5 per cent in both 2025 and 2026 to support credit expansion, but warned profitability is likely to narrow to 1.0–1.1 per cent of tangible assets for the full year.
