Qatari Banks: Attractive cash returns – best captured through QNB

Research evidence excerpt

Qatari Banks: Attractive cash returns – best captured through QNB

Investment summary

We reiterate our Buy on QNB with a revised PO of QAR22.3, revised up by +7.7%, and

initiate coverage of QIB with a Neutral rating and a PO of QAR25.2.

Consistent EPS compounders through cycles

Qatari banks have shown EPS resilience with consistent EPS compounding through the

cycles. This is led by steady balance sheet growth, a stable (relative to other MENA

banks) NIM profile, consistent improvement of operating efficiency and provision

coverage built through the cycles.

In 2026 – a year of a 15% GDP drop (QNB estimates) – both QNB/QIB are set to deliver

4/5% YoY growth in profit before tax while EPS declines modestly (-1/-6% YoY),

pressured by higher hyperinflation losses (QNB) and higher taxes (QIB). Thereafter, we

see 17/8% CAGR of EPS at QNB/QIB over 2027-29E. We see this P&L resilience

supported by:

1. Steady NIMs through interest rate cycles (Exhibit 11).

2. Moderate cost of risk (Exhibit 15).

3. Best-in-EEMEA and still improving cost efficiency (Exhibit 38).

Qatari banks are well provisioned: QIB has the highest NPL/Stage 1 coverage in MENA,

while QNB’s Stage 3 coverage is the highest. This should keep CoR in check: 81/37bps

average CoR in the next three years in QNB/QIB vs. 96/70bps past 5Y average. However,

we see risks to CoR from: 1) deteriorating macro conditions in 2026E led by geopolitical

tensions, 2) QIB’s higher exposure to Contractors & Real Estate (29% vs. 15% MENA

banks’ average), and 3) potential regulatory pressure from the central bank to increase

coverage ahead of potential asset quality deterioration, and/or potential managerial

buffers.

Balance Sheet growth resilient to changes in macro

We expect credit growth to average c.7% p.a.