Qatar has one of the most well-capitalised and secure banking sectors in the Gulf, with its leading lender, Qatar National Bank Group (QNB Group), among the world’s largest-50 banks by market capitalisation. The sector weathered successive external challenges, from the economic contraction associated to the Covid-19 pandemic to more recent global challenges associated with fluctuations in hydrocarbons prices and geopolitical conflicts. Throughout, growth in credit and profit remained solid, both in the sector’s conventional and Islamic segments.
The sector is also a major player elsewhere in Qatar’s financial services, including in the capital markets, and is a key player in social and cultural life, sponsoring events and activities across the country. Today, with the world facing rising uncertainty in the face of threats of tariffs and trade wars, the Qatari banking sector faces a new set of challenges. With strong fundamentals and an ongoing programme of reforms and initiatives, the sector is well positioned to navigate the external storms ahead.
Oversight
The Qatar Central Bank (QCB) is the main regulatory government entity for the banking sector, with the goals of maintaining monetary, financial and price stability; contribute to economic diversification; and drive financial technology (fintech). The QCB was established in 1993 under Amiri Decree No. 15. It succeeded the Qatar Monetary Authority, which had previously undertaken many functions of a central bank. This included the maintenance of the currency peg to the US dollar, as well as overall financial sector stability and development. That peg has been maintained ever since at $1:QR3.64. The central bank is headed by its board of directors, the chairman of which is the governor, who, as of April 2025, was Sheikh Bandar bin Mohammed bin Saoud Al Thani.
The QCB has a variety of specialised units, including the Banking Supervision Department. Within this is the department, which oversees the entirety of the financial sector – banks, insurance and takaful (Islamic insurance) companies and their support services, and non-banking financial institutions. For banks, the division ensures that they meet regulatory requirements and considers applications for banking licences and their renewal; requests for the opening of new offices, bank branches and ATMs; and other related services. As of April 2025, the division was headed by the assistant governor of supervision, Hamad Ahmad Al Mulla.
The central bank’s other divisions comprise financial stability, reserve management, financial instruments and payment systems, market development and innovation and corporate services. Moreover, the Qatar Credit Bureau reports to the governor of the central bank, who is, in turn, responsible to the bank’s board of directors.
The QCB also represents Qatar at international banking and finance agencies, such as the Islamic Financial Services Board, the Accounting and Auditing Organisation for Islamic Financial Institutions, the IMF and the Gulf Monetary Council, as Qatar is a member of the GCC bloc.
Standards
The QCB ensures that the sector meets international banking standards and requirements. Qatar therefore follows the guidelines and standards of the Basel Committee on Banking Supervision. Within the context of the GCC, Qatar’s banks were early adopters of the Basel III regulations, which came into effect on January 1, 2024. As Qatar has both conventional and Islamic banking arms, Islamic banks are required to have their own sharia compliance boards, with eventual plans for the creation of a central compliance board at the QCB. Since the end of 2011 conventional banks have not been allowed to operate Islamic banking windows. “Islamic banking continues to grow steadily, reflecting both domestic demand and broader regional trends,” Ahmed Hashem, acting group CEO of Dukhan Bank, told OBG. “Innovating within sharia-compliant frameworks while meeting digital expectations is essential.”
Legislation
Since its inception, the QCB’s legal framework has been regularly updated, with the year 2000 seeing a new Foreign Capital Investment Law, while in 2002 the Investment Funds Law was implemented. In 2012, a more thorough reform was initiated – Law No. 13 on the QCB and the Regulation of Financial Institutions. This new regulation set out the functions of the central bank and its objectives – a wide brief ranging from monetary policy to banking supervision, all within the framework of national strategies. The QCB was also charged with running the banking sector deposit protection scheme.
Further laws with relevance to the financial sector as a whole include the 2019 Law on Combatting Money Laundering and Terrorism Financing. Qatar has made major improvements since the law came into effect in this regard, with the most recent 2023 anti-money laundering and combatting the financing of terrorism mutual evaluation report by the Financial Action Task Force noting marked progress in the prevention of financial crimes through policy and regulatory improvements.
Banks in Qatar that are listed on the Qatar Stock Exchange (QSE) are also regulated by the exchange’s supervisory authority, the Qatar Financial Markets Authority (QFMA). Following amendments to the foreign ownership law in 2019, foreign investors are now permitted to own up to 49% of domestic banks.
Financial Zone
In addition to the regular onshore banking sector, Qatar Financial Centre (QFC) also provides a home for banking and other enterprises. The centre is supervised and regulated by the QFC Regulatory Authority, the chair of which is the QCB governor. Under the law that established QFC, banks and other entities based in the centre are subject to the Qatar International Court, rather than regular Qatari courts, for both civil and commercial matters. This legal framework employs English common law, while the rules around company licensing and taxation at QFC – as elsewhere – are set by the Ministry of Commerce and Industry.
QFC is an onshore entity, meaning that banks based there may also operate within Qatar, as well as internationally. They do not have any requirement to list on the QSE and can also have 100% foreign ownership and repatriation of profits. They may also trade in any currency and enjoy certain tax benefits. These include no personal income tax, wealth tax or zakat (a payment under Islamic law for charitable or religious purposes), 10% corporate tax on locally sourced profit and the double taxation agreements Qatar has with over 80 countries.
As of April 2025, 69 entities were registered with the QFC. The banks with branches or other trading entities among them included: Abu Dhabi Islamic Bank, Alpen Capital Investment Bank, Arab Jordan Investment Bank, Banco Santander, Bank Audi, the Bank of China, Barclays Bank, BLOM Bank, Citibank, Credit Agricole, Credit Suisse (Qatar), Deutsche Bank, First Abu Dhabi Bank, Industrial and Commercial Bank of China, JP Morgan Chase Bank, Lesha Bank, MUFG Bank, Société Générale, Sumitomo Mitsui Banking Corporation, Saudi National Bank, UBS Qatar and Vakif Bank.
Structure
As of April 2025, there were nine domestic banks with operations in Qatar and listed on the QSE. Qatar’s sharia-compliant banks account for around 25% of domestic bank assets, a proportion that has been more or less stable in recent years. All Qatar’s banks have strong financials, exceeding the Basel III minimum capital adequacy ratio (CAR) of 8% of risk-weighted assets plus a 2.5% capital conservation buffer. The QCB itself requires a higher, 10.5% Tier-1 ratio and a 12.5% total CAR ratio, with this, too, met – and in some cases exceeded – by all the domestic banks. Ahli Bank, for example, had a CAR of 21.2% in 2024, while QNB’s was 19.2%. According to ratings agency Fitch, the sector average common equity Tier-1 ratio increased in 2024 by 31 basis points to 15.2%. This shields the sector against deterioration in asset quality – total loan loss allowances covered 138% of impaired loans at 2024 – as well as against any external shocks.
Various government entities – including sovereign wealth fund Qatar Investment Authority (QIA), the General Retirement and Social Insurance Authority and the Military Pension Fund – are active participants in the sector, ensuring government support will remain robust in any future crisis. Further, overseas exposure enabled diversification and spread risk, with the Qatari banking sector’s international outlook giving it an extra edge as the world undergoes a major shift in trade arrangements in 2025.
Major Players
QNB accounted for about half of the sector’s market capitalisation on the exchange. Established in 1964 and the first Qatari-owned bank to operate in the country, QNB is the largest financial institution in the MENA region and celebrated its 60th anniversary in 2024. It has subsidiaries in 28 countries across Africa, Asia and Europe. The current chairman of QNB’s board is Ali bin Ahmed Al Kuwari, who is also Qatar’s minister of finance; while group CEO is Abdulla Mubarak Al Khalifa. QIA holds a 50% ownership of the bank. In 2024 QNB had an market capitalisation of QR159bn ($43.6bn), with total assets of QR1.3trn ($356.8bn) and received an “A+/Stable/BBB+” rating by Fitch in February 2025.
The second-largest domestic bank by assets is Qatar Islamic Bank (QIB), demonstrating the importance of Islamic banking in the local banking sector. QIB was founded in 1982 and was the first sharia-compliant bank in Qatar. It now has a share of around 37% of the Islamic banking sector in Qatar, where it had 21 branches and offices at the close of 2024. It is among the largest-six Islamic banks in the Middle East and Africa, with total assets at QR200.8bn ($55.1bn) in 2024 and an market capitalisation of QR50.5bn ($13.8bn). Its largest individual shareholder is also QIA, which held a 16.7% stake; the remaining investors were 66.8% domestic and 16.5% foreign. In July 2024 Fitch reaffirmed the Islamic bank’s ratings as “A”, with its outlook stable.
Another significant player in the market is Islamic lender AlRayan Bank, formerly Masraf Al Rayan. The entity was incorporated in 2006 and merged with Al Khalij Commercial Bank in November 2021. It has a subsidiary of the same name in the UK and subsidiaries in France and the UAE under the Al Khaliji Bank brand. As of March 2025 the bank’s largest individual shareholders were QIA (20.6%), the Armed Forces Investment Portfolio (7.5%), and the General Retirement and Social Insurance Authority (5.7%). In 2024 Al Rayan had total assets of QR171.1bn ($47bn), with a 31% local Islamic banking market share and an 8.5% share of the banking sector overall. In 2024 the bank had an market capitalisation of QR22.9bn ($6.3bn) and was rated by Moody’s in May of the same year as “A2” with a stable outlook.
Other local players include the Commercial Bank of Qatar, Dukhan Bank, Doha Bank, Qatar International Islamic Bank, Ahli Bank and Lesha Bank. Several international banks have branches in Qatar.
Financial Strategies
In line with Qatar National Vision (QNV) 2030, the country’s long-term development plan, the Third Financial Sector Strategy 2024-30 aims to boost innovation throughout the sector, enhance efficiency and investor protection, and contribute to efforts to unlock Qatar’s full economic potential. The strategy has four pillars – banking, insurance, capital markets and the digital finance ecosystem – with cross-cutting themes including governance and regulatory oversight; Islamic finance; digital innovation and advanced technologies; environmental, social and governance (ESG) and sustainability; and talent and capabilities. The QCB will monitor and measure sector-specific and overall economic indicators to show progress.
Sector Specific
For banking, the strategy calls for enhanced measures to promote transparency, accountability, and trust; enhanced efficiency, improved customer experience and innovation; and talent and capabilities to increase knowledge transfer and adapt to changing market conditions. One area of growth highlighted in the plan is financing offerings, with plans for the launch of new products to support growth in priority sectors, expanded trade and export finance offerings for wholesale and corporate clients, the development of special financing programmes targeted at small and medium-sized enterprises (SMEs), savings and investment products for expatriates to encourage them to invest in Qatar, and new Islamic and ESG offerings. The plan also aims to enhance local advisory services through support to local businesses both at home and abroad, targeted solutions for SMEs in terms of financing, digital services and the green transition; a well as wealth management for retail customers.
In terms of digital services, the strategy aims to develop a payment platform for the real-time monitoring of transactions and fraud detection (see analysis). In addition, the QCB aims to increase the variety of advanced payment solutions available on the market, such as digital wallets, virtual cards and personal financial management tools. These efforts build on previous successes related to the adoption of digitalisation tools. Digital adoption is accelerating across the sector, a trend driven by changing customer expectations and the pursuit of cost efficiency. The next phase in this journey involves deeper integration of advanced technology into core banking models beyond front-end services. Taken together, the strategy aims to foster a banking sector with improved financial stability and operational resilience, contributing to overall economic growth and diversification.
The financial strategy is in line with the wider QCB Strategy 2024-30, which aims to strengthen the financial sector and enhance resilience to external shocks, both regionally and globally. The strategy seeks to help the sector adapt to market changes, with a focus on sustainable finance and the integration of ESG principles in regulatory frameworks, digitalisation and the adoption of artificial intelligence, and leveraging opportunities within fintech. The central bank’s overall strategy has four strategic pillars: resilience and soundness, market development and diversification, digital transformation and payments, and research and international collaboration. Financial institutions play an important role in advancing national development goals, particularly under the framework of QNV 2030. Ongoing priorities within the sector include, but are not limited to, maintaining asset quality and managing exposure to sectors such as real estate and project finance.
Interest Rates
Recent disruptions in the global economy have led to a series of interest rate hikes as central banks around the world sought to contain spiking inflation. With the Qatari riyal pegged to the US dollar, the QCB rose rates in tandem with the US Federal Reserve. The central bank had just cut rates when the pandemic began, with its overnight lending rate at 2.5% in 2020. This figure rose to 5.5% in 2022 and 6.25% in 2023, before coming down again in 2024 to 5.1%, where it remained at the end of the first quarter of 2025. At that time, the repo rate was 4.85% and the deposit rate 4.60%. These rate hikes had a significant impact on bank income and profit. The pandemic period also saw a major package of government measures aimed at easing the burden of lockdowns on retailers and the hospitality sector, in particular.
Domestically, this period also saw Qatar host the 2022 FIFA World Cup. This was the culmination of years of expansionary economic activity, as stadiums, hotels, transport infrastructure and a wide range of other construction projects were undertaken. The period after this therefore saw a decline in relative economic activity, back to a more normal level. Real GDP growth in 2022 was 4.2%, according to IMF figures, but 1.2% in 2023. Non-hydrocarbons growth went from 5.7% to 1.1% over the same period. This tailing off in economic activity had a significant impact on banking activity, particularly in real estate.
Performance
Financial services continue to be a driver of economic growth, accounting for an estimated 10.2% of GDP in 2024, or QR81.5bn ($22.4bn). Qatar’s banking sector had QR2.1trn ($576.4bn) in assets as of March 2025, up from QR1.7trn ($466.6bn) in 2020. The majority of assets QR1.4trn ($384.3bn) were in domestic credit followed by QR287.7bn ($79bn) in domestic investments and QR126.9bn ($34.8bn) in assets due from banks abroad. Domestic banks accounted for 98% of assets: 69.2% of the total was in local conventional banks and 28.3% in local Islamic banks, with specialised banks accounting for the remaining local assets.
Deposits stood at QR1.1trn ($301.8bn), QR481.1bn ($132bn) of which were from the private sector, QR276bn ($75.8bn) from the public sector and QR202.5bn ($55.6bn) from non-resident deposits. Qatari banks held 97.6% of deposits, with 64.5% in conventional banks, 33.1% in Islamic banks, with the remainder of local deposits in specialised banks. Meanwhile, credit stood at QR1.4trn ($384.3bn), 99% of which was attributed to domestic banks. Conventional banks accounted for 69.3% of the total, Islamic banks 29.2% and specialised banks the remainder of the domestic holdings.
In 2024 the capital and reserves of banks totalled QR212.6bn ($58.4bn). Profitability was healthy, with the return on average equity at 16.2%, according to Fitch, up from 15.8% the previous year. “The country’s banking sector remains strong, with a robust capital and regulatory regime,” Tarek Eido, CEO and country head of UBS Qatar, told OBG. “Navigating tighter global liquidity and aligning with evolving international standards remain key challenges.”
Resilience
Like countries around the world, Qatar’s economy – and banking sector – were negatively affected by a series of global challenges in recent years, including the pandemic, the conflict in Ukraine and regional geopolitical crises. By 2024, however, the banking sector – and the economy overall – was clearly emerging from the challenges of this tumultuous period. IMF figures showed non-hydrocarbons GDP growth of 2.9% in the first three quarters of 2024, while the Asian Games that year saw more peak period tourist arrivals than for the 2022 FIFA World Cup. Purchasing Managers’ Index (PMI) readings were also all above 50 in the second half of 2024, indicating positive, expansionary sentiment in the economy. In March 2025 Fitch rated the Qatari economy at “AA” with a stable outlook, a view shared by S&P’s. Both ratings agencies point towards a declining debt-to-GDP ratio, from 49% in 2023 to 43% in 2024, as key to their assessments. Looking to the years ahead, 2026 and 2027 should also see a major ramping up of liquefied natural gas production capacity, as recent investment in the segment bear fruit, further boosting the country’s economic and financial position – and likely heralding even more buoyant banking activity.
In addition to the overall economy, the IMF reported the banking sector to be healthy in its Article IV Consultation report of February 2025. The CAR for the sector was around 20% in the third quarter of 2024, with a robust net interest margin. While the IMF cited challenges including foreign liabilities and non-performing loans (NPLs), the international institutions reported improvements in both regards. Foreign liabilities accounted for 42% of total funding at the end of October 2024, according to Fitch. The introduction by the QCB of measures increasing the cost of short-term financing in 2024, however, led to lengthening of banks’ overseas liability maturity profiles, improving their position. Another consideration is the fact that much of the external funding was also linked to the major infrastructure projects around the 2022 FIFA World Cup, with the impact of that now gradually unwinding. Indeed, the level of foreign funding declined from a 2021 peak of 47%.
In terms of NPLs, many such loans are attributed to the real estate and construction sectors, which have seen some issues related to oversupply. S&P Global, for example, calculated some 40% of total domestic credit was related to real estate and related services in its 2025 sector outlook. Even so, NPLs remain well provisioned, with Fitch reporting that total loan loss allowances covered a “solid” 138% of impaired loans in 2024. The impaired loans ratio was 3.6%in 2023, falling to 3.5% the next year, with high levels of sector capitalisation a firm support against any issues related to asset quality.
Outlook
As markets around the world continue to grapple with rising uncertainty, including inflationary pressures, interest rate shifts and geopolitical tensions, Qatari banks are expected to maintain their resilience. The banking sector stands on the threshold of transformation, with strong fundamentals providing a solid base for growth in the years to come. After successfully navigating recent global disruptions and domestic shifts – including the post-2022 FIFA World Cup economic recalibration, the downturn associated with the pandemic, and a series of regional and global geopolitical crises, Qatari banks are turning their focus towards innovation, diversification and digitalisation as the pillars of a strengthened banking sector. The sector’s solid capital adequacy and profitability levels, coupled with proactive regulatory oversight from the QCB, position it well to tackle global headwinds such as trade tensions and monetary tightening.
Central to the sector’s future trajectory is the Third Financial Sector Strategy 2024-30, which seeks to unlock new growth areas by expanding offerings in ESG financing, Islamic banking and SME lending, while advancing digital solutions that meet evolving customer expectations. With new payment platforms, digital wallets and fintech on the horizon, banks are poised to strengthen customer engagement and operational efficiency. These new products and offerings are also set to broaden the sector’s appeal and support diversification.
Meanwhile, the international footprint of Qatar’s major lenders offers an additional growth avenue, enabling them to tap into shifting global trade patterns and new investment corridors. While challenges remain – notably around sustaining credit demand and managing exposure to real estate – the sector’s resilience, supported by strong government backing and diversified assets, offers a cushion against potential shocks. As Qatar pursues its broader national development agenda, the banking sector is expected to play a pivotal role in fostering economic diversification, financing green initiatives and driving financial innovation, positioning itself as a key enabler of the country’s next phase of growth.
Read More from OBG
