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UAE, Saudi banks to lead GCC credit growth in 2026, says S&P
Ratings agency says robust capital buffers, healthy liquidity and continued lending growth position UAE ,Saudi banks to maintain stability despite a more challenging global environment.
- PUBLISHED: Mon 13 Jul 2026, 11:36 AM UPDATED: Mon 13 Jul 2026, 11:41 AM
Banks in the UAE and Saudi Arabia are expected to lead credit growth across the GCC in 2026, supported by resilient domestic economies, government investment and strong banking fundamentals, according to a new report by S&P Global Ratings.
The ratings agency forecasts average credit growth of 5 to 6 per cent across GCC banking systems this year, with higher single-digit lending growth in the UAE and Saudi Arabia, outpacing the rest of the region.
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S&P said government infrastructure spending, resilient domestic demand and continued economic activity are expected to support lending growth in both countries, even as economic growth moderates across the GCC.
For the UAE, the report noted that although sectors such as tourism, manufacturing, trade, construction and real estate account for around 45 per cent of the country's real GDP and may face some pressure, continued government projects and higher oil production are expected to support economic activity and keep lending growth relatively strong.
According to S&P, GCC banks remain well capitalised, with the average Tier 1 capital ratio for the region's 50 largest banks standing at around 17 per cent at the end of March 2026.
The report also said asset quality remains healthy, with the average non-performing loan ratio broadly stable at 2.6 per cent, while many UAE banks have strengthened provisions to reinforce their balance sheets.
Domestic deposit growth continued to outpace credit growth during the first quarter, while governments and public-sector entities injected around $53 billion into GCC banking systems during the first three months of 2026, followed by another $21 billion in April.
Banks across the region also maintained strong liquidity positions, with liquid assets accounting for about 20 per cent of total balance sheets. S&P said UAE banks have ample external liquidity and remain well positioned to absorb potential market volatility.
S&P said almost all of its outlooks on GCC bank ratings remain stable, reflecting confidence in the sector's ability to withstand external shocks.
While profitability is expected to soften modestly over the next two years because of slower credit expansion and higher provisioning costs, UAE and Saudi banks are expected to remain among the region's strongest performers, supported by larger domestic economies, stronger operating efficiency and lower funding costs.
The report added that strong capital, liquidity and existing provisioning buffers should enable GCC banks to absorb potential risks while continuing to support economic growth across the region
