Islamic banks in the Gulf Cooperation Council are well equipped to withstand potential shocks or losses stemming from the ongoing Middle East conflict, according to Fitch Ratings.
The agency said that even if regional tensions weigh on economic conditions, lenders across the Middle East—as well as in Africa, Asia, and CIS markets—have sufficient liquidity and government backing to remain resilient, unless the conflict escalates beyond control.
In its report, Global Islamic Banks Hotspots – April 2026, Fitch highlighted that GCC banks are particularly well positioned, supported by strong sovereign backing, solid capital and liquidity buffers, improving fundamentals, and a favorable regulatory environment. Asset quality across the sector also remains sound.
However, Fitch cautioned that a worsening of the conflict could introduce risks, including refinancing challenges and a slowdown in bond issuance. Banks may also face pressure on asset quality, profitability, and liquidity.
In a more adverse scenario, especially involving Iran, the agency warned of a significant hit to financing growth, alongside weakening asset quality, capital strength, and investor confidence—raising refinancing risks further.
Fitch had earlier projected robust U.S. dollar debt issuance from the GCC and Turkey this year, following strong activity in 2025.
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