QNB Group Delivers Strong 2025 Profit Growth on Improved Net Interest Margin

• The company's interest income demonstrated a minor change, while the net interest margin experienced a notable improvement.

• QNB Group's shares’ price increased as much as 8% during 2025.

• Despite a challenging macroeconomic backdrop and a notable increase in impairments and staff expenses, net profit surged, primarily driven by higher net interest margin, followed by commissions and fees.

During 2025, QNB Group's stock price increased by 8%, starting at 17.29 riyals per share and ending at 18.66 riyals per share by the end of the quarter.

Here are the key numbers:

● Interest Income: 125,012 million QAR vs. 125,323 million QAR in 2024 (minor YoY change).

● Net Interest Income: 35,778 million QAR vs. 33,819 million QAR in 2024 (an 9% YoY increase).

● Net Profit: 17,354 million QAR vs. 16,942 million QAR in 2024 (an 2% YoY increase).

● Earnings per Share: 1.74 QAR/share vs. 1.69 QAR/share in 2024 (a 3% YoY increase).

● Dividend per Share: 0.725 QAR/share vs. 0.700 QAR/share in 2024 (a 4% YoY increase). In 2025, dividends were paid in two semi-annual tranches.

In 2025, the Federal Reserve began an easing cycle, delivering a total of three interest rate cuts in response to evolving economic conditions. At present, the Fed signals one potential rate cut in 2026, while market pricing implies two. The ultimate trajectory of real interest rates, however, will remain data-dependent, with heightened uncertainty around key macroeconomic indicators. The Qatari central bank, along with central banks across the GCC region, strictly adhered to FED actions.

The net interest margin followed a remarkable improvement, increasing from 26% in 2024 to 29%. This reduction can be primarily attributed to the impact of the aforementioned drop in interest rates, leading to lowered borrowing costs and a consequential positive effect on net profit, totaling 3,040 million QAR. Concerning interest income, there was a minor decline, causing a negligible adverse impact on the net profit, which amounted to 81 million QAR.                                              

Against the backdrop of a challenging macroeconomic environment, the banking sector faced heightened concerns regarding credit risk. QNB Group, responding strategically to these conditions, opted to increase impairments in higher amounts than in 2024. This deliberate decision created an adverse impact on the net profit of approximately 867 million Qatari riyals.

Analyzing other segments of the core business, commissions, and fees contributed positively to net profit, increasing it by 414 million QAR. However, there was a negative impact of 430 million QAR due to a reduction in foreign exchange activity income. Increase in staff expenses impacted net profit negatively by 494 million QAR.

Expenses and losses originating from activities outside the core business had a considerable negative impact on the company's net profit.

From an income tax standpoint, there was a notable increase compared to 2024, leading to a significant adverse impact on net profit totaling 1,845 million QAR. This suggests that the company has likely maximized its tax optimization strategies, and in this quarter, the calculated income tax is closer to the full amount.

For more comprehensive information, please refer to the reliable financial information source, http://sahmik.com.