Regional investors will be eyeing Qatar's banks this week.
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Qatar National Bank (QNB), the country's biggest lender by assets, reported on Tuesday a 32 per cent increase in profit to 7.5 billion rials - but its proposed 40 per cent cash dividend has disappointed investors, sending the shares 5.2 per cent lower, the biggest one-day drop since 2009.
No wonder investors are eagerly awaiting the fourth-quarter earnings reports from Qatar's other banks.
"The expectation for strong dividend payments are quite high," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "Markets are expecting companies to pay out, and if there is more disappointment, I think what we saw with … QNB will happen."
Qatar's QE Index, which outperformed Gulf markets last year, fell 1.4 per cent to 8,699.46 last week. The index has slipped 0.9 per cent since the beginning of the year.
"Investors are shifting their focus to the rest of the sector," said Marwan Shurrab, the vice president and chief trader at Gulfmena Investments in Dubai.
"While QNB's dividend was low on a yield basis, it is still attractive when compared to the rest of the region."
Analysts are expecting similar growth for the rest of the Qatari banking sector.
Commercial Bank of Qatar is forecast to report a 44 per cent increase in quarterly profit to 444.1 million rials, according to analysts polled by Reuters.
Shares of the third-largest lender by market value declined 0.7 per cent to 84.40 rials last week.
Doha Bank is predicted to post a 68 per cent increase in profit to 267.60m rials.
Shares of the fifth-largest lender by market value rose 0.7 per cent to 66.20 rials last week.
Qatar Islamic Bank is expected to show a 7.9 per cent drop in profit to 394.23m rials. Shares of the second-biggest Sharia-compliant lender declined 0.9 per cent to 83.70 rials.
Qatar, which is hosting the 2022 Fifa World Cup, may realise 19 per cent economic growth for last year, according to forecasts by the IMF in October.
Global Investment House said it was "bullish" on Qatar's banks as infrastructure projects are planned on the strength of the country's gas-exporting economy.
"Qatar's burgeoning economy will trickle down quite favourably to its banking sector," the Kuwaiti investment bank said in a note last week. "Qatari banks are still expected to exhibit one of the strongest loans disbursement in the GCC, especially as the major spending on Fifa World Cup inches closer."
In the UAE, however, a less-rosy scenario looks likely.
Emirates NBD, the country's biggest lender by assets, is forecast to report a 58 per cent drop in profit to Dh172.15m for the fourth quarter.
National Bank of Abu Dhabi, the second biggest bank by assets, is expected to show a 3.4 per cent increase in its bottom line to Dh756.43m.
The Abu Dhabi Securities Exchange General Index lost 1 per cent to 2,360.55 last week, while the Dubai Financial Market General Index slipped 0.5 per cent to 1,327.54.
halsayegh@thenational.ae
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
