GCC banks — including Saudi heavyweights — boast enough capital to weather a two-month escalation in the US-Iran war, but that safety comes with a price tag, according to a Bloomberg Intelligence report picked up by Alsharq Business. To keep their Common Equity Tier 1 (CET1) ratios from dipping into the “danger zone” below 13%, banks might have to slash 2026 dividend payouts by as much as 50%.

CET1? CET1 is a bank’s core financial shock absorber. It is the highest-quality capital a bank holds to protect it against unexpected losses. Regulators watch the CET1 Ratio, which measures this “pure” capital against the risk of its loans, to ensure a bank can stay stable even during a crisis.

Safety margin math: The sector is expected to absorb a 5–15% hit to net income as risk costs climb and credit growth starts to cool off. By halving 2026 dividends, the industry could hang onto some USD 10 bn in capital. In banking terms, the move would add roughly 50 bps to risk-weighted assets as an extra “safety margin” to the balance sheet to survive the volatility.

While Saudi banks are generally some of the best-capitalized in the world, not everyone has the same breathing room: Any bank watching its CET1 ratio slide toward 14% is expected to prioritize fortifying its balance sheets over aggressive distributions to investors. The report specifically flags Bank Al Jazira and Saib as having slightly thinner capital buffers compared to the Kingdom’s giants.

Survival mindset to take over past the 60-day mark: If the conflict stretches past the 60-day mark, Bloomberg Intelligence sees these dividend cuts becoming a certainty rather than a precaution as the regional banking environment shifts from a “high-growth, high-payout” model to a state of capital preservation.

What this means for the market: To protect their capital, banks are expected to pull back on non-essential corporate lending, potentially slow down non-priority private-sector projects as lenders focus their remaining capacity on strategic sovereign priorities.

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