Qatar’s Banks Stand Out With Exceptional Capital Adequacy Ratio

DOHA: Qatari banks stand out with their exceptional capital adequacy ratios and strong provision coverage. Also, Qatari companies enjoy robust balance sheets backed by low leverage and decent Return on Equity.

In its QSE 2Q 2025 Earnings Preview released yesterday, QNB Financial Services (QNBFS) said, “We expect Q2 2025 earnings to rise 3.6% and 1.3% year-on-year (YoY) and quarter-on-quarter (QoQ) respectively.”

“We see most of the growth coming from non-bank earnings, expected to rise 6.9% and 2.4% YoY and QoQ respectively as banks increase earnings by 0.7% and 0.4%.”

“We remain constructive on Qatari equities as the mainstay LNG anchors the Qatari economy/equities directly/indirectly, augmented by ramping up of the North Field project, including the upgraded capacity expansion target – a significant portion of Qatar’s expected annual LNG capacity increase is already signed-off in long-term supply contracts,” it added.

The preview noted that Doha Bank and Commercial Bank followed Qatar National Bank and Industries Qatar in announcing/implementing share buybacks; interim dividends and IPOs/listings could add further momentum.

With several Qatar Stock Exchange (QSE) companies boasting strong balance sheets but beset with lower valuations, “we are beginning to see new initiatives aimed at enhancing shareholder value.

 QNB Group approved a QR2.9bn share buyback program in September 2024 – it has bought back more than 116 million shares by 24 June 2025. 

This was followed by Industry Qatar’s announcement of a QR1bn share buyback program in February 2025.”

During Q2, 2025 Commercial Bank and Dukhan Bank also announced their intentions to buy back up to 10% of each bank’s respective outstanding shares. 

More companies could also follow the share buyback initiative. Moreover, new rules allowing the distribution of interim dividends by QSE-listed firms could further enhance Qatar’s appeal to local and foreign investors.

Continued government efforts to grow and diversify the economy provides another platform for more companies to grow their earnings, with the latest June 2025 PMI at 52.0, confirming uninterrupted expansion in the non-oil economy since the beginning of 2024. 

According to the Bloomberg consensus, Qatar’s GDP is expected to grow by 2.6% this year, up from 2.4% in 2024.

The QSE climbed 5% in Q2 2025 (Q1 2025: -3.2%), markedly outperforming the regional index that edged lower by 0.5% in Q2 2025 (Q1 2025: +0.8%). Overall, foreign institutions (excluding GCC/Arab investors) turned bullish during 2Q2025 with a net buying positing of $325m of Qatari equities versus $328m net short in Q1 2025.

It further stated, over the medium- to long-term, the North Field Gas Expansion, a nascent but growing tourism/sporting sector and QNV2030 investments to make Qatar an advanced economy, will continue to be major growth drivers for our companies.

The demand for Qatar’s gas should remain strong for the foreseeable future on the back of geopolitical developments, specifically in Europe, with demand for LNG expected to peak between mid-2030s and mid-2040s.

With the successful hosting of the World Cup, perceived as one of the best editions and putting Qatar in the global spotlight, we are of the view that pockets of the Qatari stock market should benefit from this success.