Growth slows, resilience holds
Kamco Invest‘s GCC banking sector report shows total banking credit facilities in Qatar reached QR1.46 trillion (US$400.6bn) by the end of March 2026. This represents 5.1% year-on-year growth and 1.6% year-to-date expansion, the most moderate credit growth rate among GCC peers. The figures still point to steady lending activity despite heightened regional geopolitical tensions and softer loan demand.
Sectoral data underline a clear shift in credit drivers. Services-sector lending rose 8.6% year-on-year to QR279bn, while consumer lending increased 7.9% to QR196.8bn. This signals resilient household spending and ongoing support for non-hydrocarbon activity. By contrast, lending to the industrial sector fell 9.1% to QR17.4bn, and real estate credit declined 7.5% to QR161.9bn. Both moves are consistent with a post-FIFA World Cup 2022 correction in construction-linked activity.
General trade and contractor financing showed only modest year-on-year gains of 1.9% and 1.2% respectively, underscoring the broader slowdown in domestic credit creation. Meanwhile, lending outside Qatar expanded by a robust 17.9%, confirming that Qatar banks are increasingly looking to regional and international markets to sustain growth and diversify risk. Monthly data for April pointed to continued but measured expansion, with outstanding credit edging up 0.24% from March.
Asset growth has remained positive. QNB Financial Services reported total assets for the Qatari banking sector at QR2.206 trillion in April 2026, up 1.8% month-on-month and 2.5% compared with end-2025. Stronger international lending and a stable private-sector loan book supported the gain.
Deposits, profitability and asset quality strengthen
On the funding side, Qatar banks posted one of the strongest deposit performances in the region in Q1 2026. Customer deposits rose 4.2% during the quarter to US$453.6bn. This provides a deeper funding base and signals sustained confidence among both residents and non-residents. Despite this increase, Qatar still holds one of the highest loan-to-deposit ratios in the GCC. The loan-to-deposit ratio stood at 94.2% at end-March, second only to Saudi Arabia, but down from 97.3% at end-2025. This points to gradually improving liquidity conditions.
Revenue trends were also supportive. Qatar-listed banks recorded a 2.3% quarter-on-quarter increase in total revenues, the second-best performance among GCC banking systems. The improvement was driven largely by higher non-interest income, as fee-based business and other operating income offset margin compression on the lending side. Net interest income slipped 1.1% quarter-on-quarter, reflecting the lagged impact of lower benchmark interest rates introduced in 2025 as loan books reprice.
Asset quality metrics strengthened after a period of pressure. Loan impairment charges dropped 22.3% quarter-on-quarter to US$802.9m, following three consecutive quarters of increases. This suggests stabilising credit conditions. Nevertheless, some efficiency indicators softened. Return on equity for Qatari banks eased to 14.8% in Q1, down 130 basis points from the previous quarter, while net interest margins narrowed in line with the lower-rate environment.
These trends sit against a backdrop of broader balance sheet expansion. Separate data from QNB Group show the country’s largest lender increased total assets to QR1,438bn by 30 June 2026, up 6% year-on-year, driven by 8% growth in loans and advances. That profile reinforces the picture of a system that is still growing, but with more measured credit deployment and a rising focus on fee income and international exposures.
For investors and policymakers, the Q1 numbers indicate that Qatar banks remain fundamentally strong despite external headwinds. As regional tensions ease and domestic diversification projects advance, the key signals to watch will be whether credit growth in real estate and industry stabilises, how far margins adjust to the new rate path, and the pace at which Qatari lenders expand cross-border lending to capture regional recovery.
