‎Moody’s: GCC Islamic banks to continue outpacing conventional peers

‎<p><img src="https://argaamplus.s3.amazonaws.com/1868a1bb-58cf-441e-8efb-5acc586b20fd.png" ></p> <hr> <p ><span ><span >GCC Islamic banks are expected to continue expanding faster than conventional banks, backed by strong demand for Shariah-compliant financing and higher public-sector exposure across their retail and corporate portfolios, which supports loan quality, Moody’s Ratings said.</span></span></p> <p ></p> <p ><span ><span >Islamic banks’ structural strengths will continue to underpin stronger credit metrics than those of conventional peers, despite a more challenging operating environment.</span></span></p> <p ></p> <p ><span ><span >Islamic banks may also outperform in terms of profitability, supported by structurally higher margins and lower credit costs. Funding and liquidity remain underpinned by a strong retail deposit base and continued access to the sukuk market.</span></span></p> <p ></p> <p ><span ><span >Although Shariah-compliant liquidity management options remain limited, liquidity is generally ample, while Islamic banks have stronger funding profiles than comparable conventional banks.</span></span></p> <p ></p> <p ><span ><span >Moody’s noted that the closure of the Strait of Hormuz continues to disrupt exports and regional supply chains. Non-oil economic growth is likely to slow in 2026, particularly in tourism, real estate, construction and logistics, sectors that are sensitive to confidence and reliant on trade connectivity.</span></span></p> <p ></p> <p ><span ><span >GCC Islamic banks retain substantial capacity to absorb a decline in loan quality alongside balance-sheet growth, supported by strong earnings retention and continued market access through recent Additional Tier 1 (AT1) sukuk issuances.</span></span></p>

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Argaam - Main News · Trade Publication

Published

19th September 2026

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