Doha: Qatar’s banking sector maintained steady financial performance during the first quarter of 2026 despite a slowdown in lending growth and the impact of heightened geopolitical tensions across the region.
While regional uncertainty weighed on credit demand and business activity, Qatari banks continued to record growth in revenues, deposits and profitability, highlighting the sector’s resilience amid challenging market conditions noted the GCC Banking Sector report by Kamco Invest.
The banking credit facilities in Qatar reached QR1.46 trillion ($400.6bn) at the end of March 2026, representing annual growth of 5.1% and a year-to-date increase of 1.6%. While this marked the slowest pace of credit expansion among GCC countries, the figures point to continued, albeit measured, lending activity.
The services sector emerged as the main driver of credit growth, with lending increasing 8.6% year-on-year to QR279bn. Consumer lending also remained healthy, rising 7.9% to QR196.8bn, reflecting resilient household spending despite the uncertain regional environment.
However, some sectors continued to adjust following the post-World Cup economic transition. Lending to the industrial sector declined 9.1% year-on-year to QR17.4bn, while real estate credit fell 7.5% to QR161.9bn, suggesting a correction after the surge in construction activity associated with the FIFA World Cup 2022.
The general trade and contractor financing posted only modest gains of 1.9% and 1.2%, respectively. In contrast, lending outside Qatar expanded by a robust 17.9% indicating Qatari banks are increasingly pursuing opportunities in regional and international markets.
The monthly data for April showed credit growth continuing at a measured pace, with outstanding credit edging up 0.24% from March levels.
On the funding side, Qatar’s listed banks recorded one of the strongest performances in the region. Customer deposits increased 4.2% during the quarter to reach $453.6bn, reflecting continued confidence among depositors and providing banks with a stronger funding base.
Despite the increase in deposits, Qatar maintained one of the highest loan-to-deposit ratios in the GCC. The ratio stood at 94.2% at the end of the first quarter, second only to Saudi Arabia. Although elevated, the figure represented an improvement from 97.3% at the end of 2025, indicating slightly stronger liquidity conditions.
The revenue performance remained positive despite pressure on interest margins. Qatar-listed banks reported a 2.3% quarter-on-quarter increase in total revenues, making them the second-best performers in the GCC. The improvement was largely supported by higher non-interest income, as fee-based business and other operating income helped offset weaker lending margins.
Net interest income, however, declined marginally by 1.1% during the quarter, reflecting the delayed impact of lower interest rates introduced during 2025 as loan portfolios continued to reprice.
Asset quality also showed encouraging signs. Loan impairment charges fell 22.3% during the quarter to $802.9m after three consecutive quarters of increases, suggesting a stabilisation in credit quality.
The report further noted that profitability remained healthy, although key efficiency indicators softened slightly. Return on equity for Qatari banks eased to 14.8% during the first quarter, down 130 basis points from the previous quarter, while net interest margins also narrowed as lower benchmark interest rates continued to weigh on earnings.
Qatar’s banking sector remains fundamentally strong despite slower credit expansion and external headwinds. Healthy deposit growth, resilient revenues and improving asset quality indicate that banks are well positioned to support the country’s economic diversification agenda as regional conditions stabilise.
