Middle East banks to see strong credit growth in 2026

A neutral outlook, based on teady economic conditions and expectations of solid credit growth in markets such as the UAE and Saudi Arabia, has been issued for Middle East banks in 2026, according to Fitch Ratings.

The agency stated that banks are likely to maintain “sound profitability” despite an anticipated decline in interest rates, while sustaining stable asset quality, strong liquidity positions, and capital buffers commensurate with their risk profiles.

Fitch noted that two-thirds of the Issuer Default Ratings (IDRs) assigned to Middle East banks are investment grade, driven largely by the likelihood of sovereign support. “Around 62% of IDRs are based on potential sovereign support, with a further 33% linked to standalone credit strength,” the agency said in its statement. Only 5% of ratings stem from potential shareholder support.

The widespread of IDRs — ranging from ‘AA-’ to ‘CCC’, with the lowest concentration in Iraq — reflects the region’s varied sovereign risk landscape.

Rating outlooks for banks across the Middle East are “virtually all stable”, according to Fitch. The only exceptions are Omani banks, which carry a positive outlook in line with the sovereign, and Bahraini banks, which remain on a negative outlook for the same reason.