Qatar’s Islamic banking sector continued to expand in 2025, supported by stronger banking activity, growing digital services, regulatory improvements and rising demand for sukuk and sustainable financial products.
Data from the Qatar Central Bank’s 2025 Financial Stability Report, issued in August, showed that total banking sector assets increased by 5.1% during the year. Growth was supported by higher lending to both public and private sector borrowers, while the overall financial system maintained strong capital and liquidity positions.
The sector’s capital adequacy ratio rose to 19.9% in 2025 from 19.6% a year earlier. The Tier 1 capital ratio also increased to 15.7% from 15.2%. Asset quality improved, with the non-performing loan ratio falling from 3.6% to 3.4%, while provision coverage for non-performing loans increased from 77.4% to 84.6%.
Islamic finance recorded broader growth during the year. According to Bait Al-Mashura Finance Consultations’ ninth annual report on Islamic finance in Qatar, total Islamic finance assets reached QAR 718.5 billion in 2025, compared with QAR 682.3 billion in 2024.
Islamic banks accounted for 85.8% of those assets, with holdings of QAR 616.5 billion. Their assets grew 5.3% during the year, slightly faster than the 5% growth recorded by conventional commercial banks.
The country’s four Islamic banks, Qatar Islamic Bank, Masraf Al Rayan, Dukhan Bank and Qatar International Islamic Bank, maintain significant positions across major lending categories. Islamic banks accounted for 63% of consumer financing, 44% of real estate financing, 42% of construction financing and 34% of industrial financing. Around 96% of their financing was directed toward the domestic market.
Deposits at Islamic banks increased 7.5% to QAR 364.4 billion, while financing rose 4.2% to QAR 418.3 billion. Domestic assets reached QAR 554.3 billion, representing annual growth of 4.6%.
Industry leaders said digitalisation is becoming an important source of growth. QIIB Chief Executive Dr Abdulbasit Ahmed Al Shaibei told Qatar News Agency that early investment in digital infrastructure had improved efficiency, reduced costs and enhanced customer services.
Sukuk are also expected to play a larger role as Qatar continues projects linked to its National Vision 2030 strategy. Al Shaibei pointed to strong demand for sustainable financial products, including QIIB’s $500 million Oryx sustainable sukuk, which attracted demand more than eight times the amount offered.
Bait Al-Mashura Vice Chairman Dr Khalid bin Ibrahim Al Sulaiti said sustainable sukuk issued in Qatar have exceeded QAR 20 billion. He also highlighted digitalisation and financial technology as major drivers of Islamic finance, while calling for updated regulations, stronger green-finance incentives and deeper secondary-market liquidity.
The sector still faces challenges from global economic uncertainty, geopolitical tensions, changing borrowing costs and competition from conventional banks. Regulators also face the task of ensuring rapid digital development remains consistent with Sharia requirements.
Despite these pressures, industry experts expect Qatar’s Islamic finance sector to maintain growth over the next five years as private-sector lending, green investment, renewable energy projects and financial technology continue to expand.
