S&P Projects Declining Cost of Risk for Qatar Banks by 2027 Amid Economic Growth
Standard & Poor's (S&P) forecasts a decline in the cost of risk for Qatar's banking sector by 2027, attributed to strong economic growth and favorable corporate funding conditions. The North Field Expansion project is expected to enhance LNG production, contributing to an average real GDP growth of 5% from 2026-28, while the non-performing loans ratio is projected to decrease to 3.4%. Additionally, a potential rate cut by the US Federal Reserve may lead to a slight reduction in banks' net interest margins.
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Qatar's banking sector is predicted to experience a decline in the cost of risk by 2027, with estimates of 70-80 basis points, driven by a strong economy and favorable funding conditions for corporates, according to Standard & Poor's (S&P). The North Field Expansion project is expected to boost LNG production by 32% by 2027, contributing to a projected average real GDP growth of 5% from 2026-28.
S&P anticipates a 50 basis point rate cut by the US Federal Reserve in H2 2026, which the Qatar Central Bank will likely follow, leading to a slight decrease in banks' net interest margins. Profitability is expected to decline to a return on assets of 110 basis points in 2026-27.
The non-performing loans ratio is forecasted to fall to 3.4% in 2026-27, supported by the largest banks' stable asset quality. Direct exposure to climate-sensitive sectors is about 6% of total loans as of November 2025, with Qatar positioned to manage the transition from fossil fuels effectively.
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