Risk And Digital Costs Squeeze Qatari Bank Profit Outlook For 2026

Qatari banks face a modest profitability squeeze in 2026 as higher risk costs and technology spending offset otherwise stable income, Zawya reported from a Moody's Ratings note on the lenders it covers.

Moody's expects net profitability to slip to 1.0% to 1.1% of tangible assets for the full year.

The forecast links the decline to higher costs of risk and pressure on asset quality during the Middle East conflict.

Operating income is not the main weakness in the outlook.

Fee and commission income is expected to rise as banks expand non-funded income activities, while net interest income is expected to stay broadly stable in the second half of 2026.

The expense line carries the offset.

Continued investment in digital services and technology is expected to lift operating costs enough to absorb the stability in operating income, leaving profit growth dependent on credit costs and economic activity rather than revenue alone.

First-half results show the same balance.

Banks generated QAR14.2 billion, or $3.9 billion, in aggregate net profit, leaving the total broadly unchanged from a year earlier.

Operating income rose 8% and provisioning costs fell 6%, but operating expenses climbed 12%.

Margins gave lenders another stabiliser.

Net interest margins held near 2.3% as interest income and interest-earning assets increased, while aggregate non-interest income rose 8% on stronger fees and commissions.

The Gulf comparison remains a support for the sector.

Qatari banks continued to report the highest operating efficiency in the region despite rising costs, giving them a lower cost base than many peers as investment spending continues.

A recovery toward historically strong profitability in 2027 and 2028 depends on improved economic activity, stronger operating income, lower provisioning needs and the sector's structurally low operating cost base.