Islamic banks in the Gulf Cooperation Council (GCC) region are well positioned to absorb any unexpected shocks or losses caused by the ongoing Middle East conflict, according to Fitch Ratings.

Even if the regional turmoil causes some economic pain, these lenders in the Middle East, as well as those in Africa, Asia and CIS markets, have enough cash and government backing to survive the storm – unless the conflict escalates and can no longer be contained, the ratings agency said.

Fitch has released a new report, Global Islamic Banks Hotspots – April 2026, focusing on Islamic banking sectors in key markets.

Fitch noted that most GCC banks in particular are well-buffered, as they enjoy strong sovereign support, ample capital and liquidity, improving fundamentals and a favourable regulatory environment. The lenders also have sound credit quality.

However, Fitch warned that if the turmoil escalates beyond being contained, lenders in the region could face refinancing risks and a bond issuance slump. Banks could also face weakened asset quality, profitability and liquidity.

“An adverse scenario in the Iran conflict could significantly weaken financing growth, asset quality, profitability, capital and liquidity buffers. Banks could also face greater refinancing risk amid weaker investor sentiment.”

The ratings agency had previously forecast that the GCC and Turkey would see strong US-dollar debt issuance this year, following robust activity in 2025.

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com