Commercial Bank of Qatar’s 2025 Results: Profit Down, Balance Sheet Up, Strategy Refreshed
Commercial Bank of Qatar (The Commercial Bank P.S.Q.C.) has posted a tougher FY 2025 on the bottom line, but with clear signs of underlying strength and a refreshed plan for 2026-2030. Net profit before Pillar Two Tax fell 21.4% to QAR 2,384.4 million, and net profit after tax dropped 27.3% to QAR 2,204.9 million. The drivers were heavier provisions, higher staff-related costs, and losses in Turkey.
Against that, core income grew, assets expanded double-digit, capital stayed strong, and credit ratings were affirmed. There’s also a proposed dividend of QAR 0.30 per share, subject to approvals. Let’s unpack the moving parts, why they matter, and what to watch in 2026.
Key Numbers You Should Know
| Metric | FY 2025 | FY 2024 | Change |
|---|---|---|---|
| Net profit before Pillar Two Tax | QAR 2,384.4m | QAR 3,032.1m | -21.4% |
| Net profit after tax | QAR 2,204.9m | QAR 3,032.1m | -27.3% |
| Total assets | QAR 192,912.7m | QAR 165,677.8m | +16.4% |
| Loans to customers | QAR 104,547.5m | QAR 91,480.0m | +14.3% |
| Loans (excl. acceptances) | QAR 96.1bn | – | +5.7% vs 2024 |
| Customer deposits | QAR 89,445.4m | QAR 77,006.8m | +16.2% |
| Net interest income | QAR 3,413.9m | – | +2.9% |
| Fees and other income | QAR 1,372.2m | – | +10.8% |
| Operating expenses | QAR 1,411.2m | QAR 1,273.2m | +10.8% |
| Cost-to-income ratio | 29.5% | 27.9% | Higher |
| Non-performing loan (NPL) ratio | 6.1% | 6.2% | Improved |
| Stage 3 coverage | 60.4% | 52.8% | Higher |
| CET1 ratio | 12.2% | 12.3% | Slightly lower |
| Capital adequacy ratio (CAR) | 17.6% | 17.2% | Higher |
Why Profit Fell: Provisions, Costs, Turkey, and a New Tax
The profit drop is not about weak demand. It’s mainly about risk costs and accounting charges. Net provisions rose to QAR 1,193.3 million (from QAR 467.2 million), as the bank continued to build for its remedial book. That drove the net cost of risk to 75 basis points (bps) from 36 bps, while gross cost of risk rose to 148 bps from 102 bps. In plain English: more cash set aside for problem loans, even as recoveries improved 18.3% to QAR 711.8 million.
Operating expenses increased 10.8% to QAR 1,411.2 million, partly due to IFRS 2 long-term incentive scheme (LTIS) movements – that’s the accounting cost of share-based remuneration. Management helpfully gives a normalised profit before Pillar Two Tax of QAR 2,424.6 million excluding LTIS movements.
There was also a reported loss of QAR 144.7 million at Alternatif Bank in Turkey, in a hyperinflationary environment where the Group booked net monetary losses of QAR 131.2 million. Lastly, the new BEPS Pillar Two Tax – a global minimum tax regime targeting at least a 15% effective rate – added a QAR 179.4 million charge. The bank notes potential reliefs once executive regulations are finalised in 2026, but for now it’s a headwind.
Underlying Engine Still Running: Growth in Assets, Loans and Fees
Set aside the provisions and you find a business still growing. Total assets rose 16.4% to QAR 192.9 billion, with investment securities up 21.3% to QAR 40.3 billion and net loans up 14.3% to QAR 104.5 billion. Excluding trade-related “acceptances”, loans grew a steadier 5.7%, which looks more sustainable.
On funding, customer deposits climbed 16.2% to QAR 89.4 billion. Low-cost deposits – the cheap, sticky money that supports margins – grew 4.5% and now account for 37.0% of the mix. Net interest income inched up 2.9% to QAR 3,413.9 million, while fees and other income jumped 10.8% to QAR 1,372.2 million. That tilt toward capital-light, fee-based income is exactly what the bank wants to scale.
Asset Quality: A Mixed Bag, But Coverage Is Stronger
The NPL ratio improved slightly to 6.1% from 6.2% – not a bad result given the provisioning build. More importantly, Stage 3 coverage increased to 60.4% from 52.8%. Higher coverage means a thicker cushion against losses on bad loans. The step-up in provisions is painful for this year’s profit, but it also de-risks the balance sheet heading into the new strategy period.
Costs and Efficiency: A Blip the Strategy Aims to Tackle
The cost-to-income ratio rose to 29.5% from 27.9%, reflecting higher staff costs including LTIS. Management is targeting risk and cost control as a priority in 2026. If fee income keeps scaling and loan growth normalises, the path back to sub-30% efficiency should be achievable.
Capital, Liquidity and Ratings: Pillars of Strength
CET1 sits at 12.2% and the capital adequacy ratio improved to 17.6% (after adjusting for proposed dividends). That’s comfortably above regulatory minimums. The market has noticed too: S&P affirmed ‘A-/A-2’ with a Stable outlook in October 2025, while Fitch (‘A’) and Moody’s (‘A2’) also affirmed Stable earlier in the year.
Funding access looks healthy. In September, the bank issued a USD 600 million 5-year senior bond at a 4.625% coupon, with an order book of roughly USD 2.0 billion. That demand let them tighten pricing and diversify funding alongside debt securities of QAR 13.3 billion and other borrowings of QAR 27.4 billion.
Dividend and Payout: Cash Back to Shareholders
The Board proposed a dividend of QAR 0.30 per share, equivalent to 30.0% of nominal value. It’s subject to Qatar Central Bank approval and shareholder endorsement at the AGM. Payout ratio and dividend yield are not disclosed.
2026-2030 Strategy: Safer Growth, More Fees, More Digital
There’s a clear blueprint for the next phase. The refreshed strategy leans on disciplined underwriting, provisioning, and capital efficiency, while scaling fee income and modernising platforms. Wholesale will prioritise higher-return segments and ramp transaction banking and trade finance. Retail will deepen its presence in core Qatari segments while defending expat and employee banking, with continued investment in cards, remittances and digital wealth.
Enablers include more AI, automation, and data-driven decision-making to boost productivity and agility, plus simplified organisation and skills investment. The goal: a more balanced, sustainably profitable franchise with high-quality earnings through the cycle.
My Take: The Good, The Bad, and What Matters Next
- Positives: Strong asset growth, deposit momentum, better Stage 3 coverage, affirmed ‘A’ category ratings, and a solid CAR at 17.6%. Fee income is moving in the right direction, and associates contributed QAR 406.4 million, up 23.2%.
- Negatives: Provisioning surge hurt profit, cost-to-income drifted higher, CET1 eased slightly, and Turkey remains a drag in a hyperinflationary setting. The new Pillar Two tax is an added structural headwind, albeit with potential reliefs.
- Why it matters: The bank is absorbing the clean-up and new tax costs now, while laying groundwork for steadier fee-led growth and tighter cost control. If credit trends stabilise and the strategy lands, 2026 could see cleaner earnings.
What to Watch in 2026
- Provisions and cost of risk: Do they normalise from 2025’s elevated levels?
- Fees and transaction banking: Continued double-digit growth would validate the capital-light pivot.
- Cost discipline: Can the cost-to-income ratio trend back down as LTIS effects fade and efficiencies kick in?
- Pillar Two tax: Any confirmed reliefs once executive regulations are finalised.
- Turkey: Operating profit improvement is encouraging, but reported losses need to narrow.
- Capital and ratings: Maintaining CET1 around current levels while funding growth and dividends.
Bottom Line
Commercial Bank of Qatar’s 2025 print is a reminder that building buffers and paying new taxes can dent short-term profits. But the franchise is growing, funding is diverse, capital is ample, and ratings are solid. With a refreshed 2026-2030 strategy focused on fee income, digital execution, and disciplined risk-taking, the building blocks for more resilient earnings are in place. Now it’s about delivery.
