QNB Group Q3 2025: Higher Interest Margins Offset Headwinds, Driving a Modest Profit Increase

• The company's interest income grew by less than 1% YoY, while the net interest margin experienced a notable improvement.

• QNB Group's share price recorded a strong increase of 7% during Q3 2025.

• Despite a challenging macroeconomic environment, QNB Group achieved a strong increase in net profit, driven by improved interest margins and higher commissions and fees, which offset the impact of increased impairments and other operating expenses.

During Q3 2025, QNB Group's stock experienced a strong increase, starting at 17.29 riyals per share and ending at 18.58 riyals per share by the end of the quarter.

Here are the key numbers:

● Interest Income: 93,479 million QAR vs. 92,839 million QAR in Q3 2025 (a 1% YoY increase).

● Net Interest Income: 26,464 million QAR vs. 24,050 million QAR in Q3 2025 (a 10% YoY increase).

● Net Profit: 13,081 million QAR vs. 12,884 million QAR in Q3 2025 (a 1% YoY increase).

● Earnings per Share: 1.31 QAR/share vs. 1.28 QAR/share in Q3 2025 (a 2% YoY increase).

In 2024, the Federal Reserve initiated a series of interest rate cuts, implementing three reductions in total to address economic conditions. Initially, the Fed had signalled plans for a more aggressive monetary easing strategy in 2025. However, following Donald Trump's election victory and uncertainty concerning trading policy, combined with encouraging economic data, the central bank has adopted a more cautious stance. It now projects that only two rate cuts are likely for 2025, reflecting a more measured approach in response to the potential impacts of the new administration's policy measures. The first rate cut happened in September 2025.

The Qatari central bank, in line with its GCC counterparts, closely aligned its monetary policy with the U.S. Federal Reserve. While the decline in interest rates resulted in only a modest uptick in interest income, effective loan portfolio management drove a notable improvement in the net interest margin. This outcome highlights QNB Group’s ability to navigate a shifting rate environment, reinforcing the resilience and adaptability of its financial strategy.

The net interest margin underwent a remarkable improvement, increasing from 26% in Q3 2024 to 28% in Q3 2025. This improvement generated a positive effect on net profit, totaling 2,248 million QAR. On the other hand, the bank achieved a modest increase in interest income of 1%. This achievement can be attributed to the bank's robust level of activity and a well-balanced portfolio, resulting in a positive impact on net profit amounting to 166 million QAR. Such resilience underscores the bank's adeptness in adapting and thriving within a dynamic interest rate environment.

Against the backdrop of a challenging macroeconomic environment and the looming threat of a recession, 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 a negative impact on the net profit of approximately 1,043 million Qatari riyals. This move reflects a strategic commitment to navigating and mitigating challenges in the face of adverse economic conditions.

Analyzing other segments of the core business, commissions, and fees contributed positively to net profit, increasing it by 347 million QAR. However, there was a negative impact of 409 million QAR due to a reduction in foreign exchange activity income. An increase in staff expenses impacted net profit negatively by 380 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 Q3 2024, leading to a significant adverse impact on net profit totaling 1,426 million QAR. The income tax increase is significantly higher than the increase in pre-tax income. 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.

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