Cash returns could surprise positively, even as earnings disappoint

研报英文原文证据摘录

Cash returns could surprise positively, even as earnings disappoint

Investment summary

We see QIB as an appealing cash-return story with 10% 3Y DPS CAGR, with a strong

capital position supporting potential domestic M&A, alongside a benign cost of risk

environment underpinned by high coverage. We see 8% average downside potential to

consensus EPS over 2026-28E, as we believe the Street underestimates: 1) taxes: we

assume an 11% rate, in line with management guidance, vs. 6.6% by consensus; and 2)

the cost of AT1 instruments, we assume QIB does not repay the AT1 issuances. We

initiate at Neutral with a PO of QAR25.2, valuing the stock at 13.8x P/E and 1.95x P/BV

on 2026E for a 4.1% dividend yield (2026E).

10% 3Y DPS CAGR, with potential for higher cash returns; upside to consensus

We expect EPS to decline 6% YoY in 2026E despite a 5% YoY increase in pre-tax profits

due to higher taxes (11% BofAe), before growing at a 7.7% CAGR over 2027-29E.

However, we see DPS growing at a 10% CAGR over 2026-28E as we believe QIB can

increase its payout ratio from 46% in 2025 to c.60% in 2028E given strong

capitalization (18.8% CET1 in 2026E). We see upside to consensus DPS as the Street

expects only a c.48% avg. payout over this period. Management has ruled out any

international M&A, but is open to exploring M&A opportunities in Qatar. We see room

for a buyback program too, although the company has not confirmed if this is under

consideration. We assess QIB’s excess capital, CET1 in 2027E above the regulatory

minimum (before temporary capital relief from the QCB due to the ongoing conflict) and

a 2ppt assumed management buffer, at US$3.5bn or 25% of the current market cap.

However, we see downside to cons. EPS (c.8%) led by taxes and AT1 cost